Before you consider financing your business, ensure that both your personal and business goals are clearly defined. Even in putting up a business plan that will guide the growth path and process for the business, an entrepreneur will need to establish personal goals. In short, everyone must know what they ought to achieve at every stage in life. The business in turn should assist you achieve the desired goals. Entrepreneurs do not work for the business; in real terms, the business works for them. It is a vehicle towards the achievement of the set objectives. It is actually inappropriate to subsidize a company’s operations as owner. Good businesspeople hardly use personal vehicles to carry out company work unless the company pays for it. It is the business that should instead subsidize your operations because that is why it exists – to support your personal goals. Owners who plough capital into a troubled company do so with the expectation that they will be paid a high return after a period of time.
Besides personal goals, an entrepreneur will need to be clear about business goals. These precede the financing decision and they determine the growth pattern of your business. It must be clear from the outset what your business is all about you and what you want to achieve from it. One couple started a service station but without understanding what it was all about. They went on to invest all their earnings into property in the quest for rapid expansion. They forgot that the service station needed a lot of liquid cash as many oil marketing companies such as Bp, Total or Caltex will have limited liquidity provisions. They want cash. The consequences were disastrous. All their properties that existed prior to this business have been taken over by banks that helped finance the purchase of daily stocks of fuel. You can never have a realistic business plan without getting together sound information on your business. Successful entrepreneurs avoid plunging resources or expanding rapidly into investments they know very little about.
First, the main objective of a business is to produce goods and services. This point needs to be emphasized because most of us set up businesses for the primary purposes of reaping off people. We seek to be rewarded before we have produced a good or service that fully satisfies the customer.
An example is of a gentleman who set up a company selling computers and software. He was awarded a contract by the government to deliver a number of computers. He received a down-payment but failed to deliver. He later fled the country. Unless you are sure you will deliver goods and services for which you should be paid, you are simply defrauding others.
Second, your business objective is to succeed. Entrepreneurs never plan to fail. A good business plan should fully support this function of success. Remember that from the moment you set up your business, society and contemporaries watch you. Some will not bother about whether you make profits or not. The fact that you are functioning triggers some expectations of goodwill from them. Some sentiments may be negative and others positive. Success in this case can be measured by the fact that the business has finally established the dream of producing goods and services. It is about being in the right business.
Third, your business goal should be about making profits. You are starting a business for positive reasons – you saw an opportunity- your business plan should, therefore, project profitability otherwise no one will fund it. A business is an investment and by definition, an investment is the creation of money through the use of capital. In other words, your business should earn a reasonable return. Once again, as discussed in the previous chapter, you are in business to make money.
Fourth, your business goal is to grow. It takes courage to start a business but it takes much more to keep it going successfully. Some businesses have been well established and operate profitably but they have been producing the same quantity for the past ten years. Growth is measured by actual geographical expansion, product volume, number of employees, profitability, and levels of assets and to some great extent, social responsibility. The bigger you become, the more responsibilities to the community you may have! But this expansion should be incremental otherwise it will be recipe for disaster.