Put your best foot forward

Setting up a business on your own can be daunting. To ensure you start off on the right foot, head in the right direction, and reach your goals, it’s crucial you have the right structure in place

Making even a minor error when setting up a company can have big implications later on. There are a number of things to consider when creating your business plan.

• Will you operate as a sole trader, in partnership, or as a limited liability company?
• Should you set up a trust to protect your personal assets?

While these decisions may seem simple, whatever you choose can impact on your ability to grow, sell or even shut down the business. Furthermore, there are a myriad of tax laws pertaining to each structure.

Getting your money

Once you’re operational, your first ambition will be to make money. However, generating income isn’t as straightforward as just doing the work, sending out an invoice and moving on. They say ‘cash is king’, and a business without cash can be sure of a very short life.

A strong accounting system is a great asset to ensure you get paid. It’s a lot easier to keep track of invoices on a computerised system, rather than keeping pieces of paper under the seat of your ute!

If the worst happens and you struggle to collect payment, it’s important to understand a key piece of law – the Construction Contracts Act. Knowing your rights under law can be a key ally if it does come to the crunch, in terms of being paid.

Keeping your money

Once you’ve been paid, you will want to hang on to as much of that money as possible. After all, you got into business to make money for yourself, not for someone else.

Excluding the payment of expenses, there are many ways through which you can be parted from your hard-earned cash. In fact, while not often considered a threat, this is one of the riskiest areas for a business.

Contract disputes, insurance and ACC claims – often arising from not having contracts or insurance in place – can be extremely damaging to a business. If a decent reserve of funds isn’t built up, a business can disappear very quickly. For example, how prepared is your business for dealing with the upcoming change to health and safety legislation?

Having the right type of insurance and contracts in place can be the difference between success and failure. Due to the complexity of these areas, we recommend you consult an expert in these fields.

“Having a growth plan will enable you to know when you can get off the tools, afford to employ others, acquire another business or even sell to someone else

Growing your money

Have you considered what you’re going to do when you’re unable to get on the tools each day? It might be a scary thought, but it’s important to have an end in sight even as you begin. For this reason, having a plan to grow your money is the final ingredient to your business’ success.

Do you want to build an empire of companies, with an eye on becoming the next big player in the market? Are you happy to be a subcontractor and leave the headaches to someone else, or do you want to be somewhere in between?

Wherever you want to be, you’re going to need more cash than you started out with. Having a plan for how to grow your money is incredibly important.

As we all know, a good building isn’t built without a robust set of plans – so why would your business be any different?

Having a growth plan will enable you to know when you can get off the tools, afford to employ others, acquire another business or even sell to someone else.

While the above is a snapshot of what’s important to a business, there’s a lot more to understand. With that in mind, Crowe Horwath has teamed up with Minter Ellison Rudd Watts to provide a free comprehensive afternoon training session to cover off these areas in more detail, and give you and your business the key tools it needs for success. The sessions begin in late April 2015 and will be running in different locations around the country. For further information or expressions of interest, please contact us at Auckland@crowehorwath.co.nz.

 

More Information

If you have questions about any of the topics raised in this article, in particular around risk management or any other financial matters; or you would like to attend the free training session in your area, please contact Peter van der Heijden at peter.vdh@crowehorwath.co.nz; or your local Crowe Horwath advisor.

For the contact details of your local office, please visit: www.crowehorwath.co.nz/locations or phone 0800 494 569.