Buying or building a successful business
We recently advised Tim, a business owner who had started a business providing specialised IT support to a range of government agencies focused on managing climate control.
Tim left a lucrative job in the IT industry to fulfil his dream of becoming a small business owner. Tim has been working long hours and has established a good reputation with his customers by providing a quality service.
Tim wanted to know if he was earning more now than when he was employed and the steps he needed to take to grow his business. To grow his business Tim identified that he would need to employ specialist staff, purchase systems for quality assurance and job costing and would require funding for new equipment and working capital.
This case study highlights how small business owners need to examine the return their business is generating and the step required to create a business with easily identifiable value.
Client issue:
- Staying employed or become a business owner
- No plan for growth
- Finance needed to support growth
How to resolve in 3 easy steps
1. Calculate the Earnings
Tim completed a comparison between the income his business is generating and his previous earnings in a Full time job. This involved the following calculation:
2. Prepare a Business Plan
Tim agreed to complete a business plan to document his business growth objectives. Tim’s main planning objectives included creating systems to control his anticipated future growth, developing a plan for staff management with incentives and cash flow projections to secure bank funding support.
3. Finance and Insurance
Tim approached Thnk Advisory to secure funding support. We were able to assist by firstly preparing a comprehensive cash flow forecast and then referring Tim to a finance broker who suggested that Tim would be able to use the equity in his house to secure interest only funding support for the business. We were also able to refer Tim to an insurance broker who also updated his business insurance to include extra cover for the new debt. In addition, we were able to refer Tim to a financial planner to review all risk insurance needs for Tim and his family.
Client Process
The Business Life Planning Program was used to document Tim’s business growth objectives. Once completed new insurance policies were purchased for life, key person, sickness and accident and trauma insurance. Tim’s Bank provided a drawdown facility for Tim to manage his budgeted working capital requirements.