Recently in Business Plans Category

 I recently returned from a 2 week bicycle adventure where we cycled from Howick in Kwa Zulu Natal to Cape Town.  While the 1878 kilometers proved challenging at times, it was the people that made a tremendous impact.

One particular farmer on the edge of the Karoo showed us how things should be done.  

Have you ever noticed that the person selling a business always wants more that you think its worth? Ian de Lange of Seed Investment Consultants aptly describes a common ailment of business owners known as the endowment bias.

This is the theory that people place a higher value on an asset once their right to that asset has been established. In other words people, and more specifically, investors, place a higher value on an investment that they own relative to that same investment if they did not own it.

When you buy a business...are you paying for the value of the business or are you paying the market price?

Buying a business based on the market price is likely to lead to paying too much.

A Business plan is a tool which forces you into thinking and planning strategically. In doing so, it will force you to think through some tough issues such as:
Are you sure that what you are doing now, is taking you closer to where you want to be in the future?
Do you know what you want your business to look like in five or ten years time? If you don't think that is important, have you considered:

• Do you want to sell your business in the future or are you just trying to generate a source of income? The way you answer this will greatly impact the decisions you make and the way you run your business now going towards that goal.
• Are you aware of the things that you need to do now so that your company is in a saleable state in the future?
• Or alternatively, do you know whether your company will be able to generate sufficient income for your needs in five years time? By the time you realise the company is not generating sufficient income for you, its already too late. You need to plan ahead.