Being a business owner can be exciting and scary at times. As a business owner, your focus is on bringing in money, and you can get overwhelmed with questions such as when you should appoint an accountant, which slips or records you keep, whether you should register a company, and when you should recruit staff.
Generally, if you need funding for operational expenses like salaries, then your funding application won’t be successful. The business plan needs to outline objectives and demonstrate your understanding of your market, your strengths and weaknesses, your competitors, and your competitive advantage. Getting a valuation of your business is important to understand its worth. Many will argue that a valuation is relative, and while this is true to an extent, the valuation gives you a starting point. You can also measure growth over time by comparing valuations over various periods.Funders and investors will assess your business’s financial health before providing funding.
Unforeseen events can still threaten your business, no matter how well-prepared you are. Your business might have a strong balance sheet but insufficient cash available to recover from a significant loss following a fire, theft, or damage to equipment or stock. Having a buy-and-sell agreement and policy can mitigate the risk of your business having operational interruptions or financial losses. It could be the case that the heir who gets the shares doesn’t appreciate the hard work that has been put into growing the business to where it is today and may treat it as an ATM, which will impact the growth in the long term. The buy-and-sell policy ensures the heir gets their payout in cash, while the remaining shareholder can continue with business as usual.