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Monday September 8, 2014

Planning for long term business success

 

According to the 2014 Small Business Sector Report (http://www.mbie.govt.nz/what-we-do/business-growth-agenda/sectors-reports-series/pdf-document-library/the-small-business-sector-report-2014.pdf), most new small businesses are started as people look for a total lifestyle change or as an investment strategy for the future.

At last count there were approximately 460,000 small businesses in New Zealand, the majority of them (69%) being owner-operated (or ‘soloists’ to use a common phrase). 

It is fair to say that the small business sector plays an important commercial role in New Zealand’s economy, contributing nearly 30 per cent of New Zealand’s GDP.

Yet the analysis conducted by MBIE for the report, shows that the smaller the business, the lower the survival rate.

  • After four years in business, less than 50% of soloists will still be operating.
  • For microbusinesses (1-5 employees) statistics show that 50% will be operating at the six-year mark.

Achieving the business growth and success that you have dreamed requires passion, persistence and careful planning.

There is an old adage that “if you fail to plan, you are planning to fail” (Benjamin Franklin).

There are numerous government initiatives to support small businesses and to help them to grow and succeed. If we as a nation are to truly tap into the creativity and innovation that sits behind a lot of these small businesses, support also needs to come from partners at the very early stages of business establishment.

Soloists often look to their business network for support to keep them motivated, innovating and adapting to a changing economic climate. Your accountant should play a significant role in your support network.

At Marley Loft, we take the time to sit with our clients at the business concept stage, or at key points in their business development cycle, and conduct business-planning workshops. This time has proven to be an invaluable investment by clients as it helps to identify and plot business trajectory and provides a strong model for business growth and resourcing.

“As a start up business we are grateful for the advice that Marley Loft has given us – offering support and sharing in our enthusiasm to grow our fledgling business."

One client came to us with a unique business proposition, based on their passion for coffee and food, wanting to turn it into a viable business.

 

The planning workshop with two of the Marley Loft team helped her to lay-out a two, five and 10 year business plan and identified the key information and accounting processes required to support business growth.

This client was not an accountant and didn’t want to spend valuable time working on her business finances when her time could be more effectively channelled into the business – time is money!

We set her up on Xero, with accountant access, so that all incoming and outgoing monies could be tracked, reconciled and reported. We put into place a process whereby one of our accountants manage the company books and IRD payments, as well as providing regular business and personal financial reports.

We also provided advice on structuring the business, setting up a trust to protect her home and assets, and talked through the pros and cons of running a home based business as compared to operating out of leased commercial premises. She was not at a position to lease premises straight away, but we did factor this into the business plan at a strategic growth point.    

Two years along the small business road and this client is now running a successful business, employing 25 people and providing a strong profit year on year. She is well on the way to achieving her goals.

Dedication and commitment to business is rewarded by profit.

Whether you are at the early stages of business set-up or run a well-established organisation and have an innovative new business idea, Marley Loft can assist you to plan for long-term business success.