This is the second in a new blog post series by business consultant and Dream & Do friend Marcella Merck from Merck Business Consulting.
Cheque shock is a term used to describe the phenomenon that occurs when people suddenly find themselves in the money. Whether it be lotto winnings, inheritance or an investor cheque, we have all heard the stories... one minute they are rolling up at the latest events in the latest threads and making deals left right and centre, BWR Young Rich List! A year later they’re broke and never heard from again. How does that happen?
Cheque shock, that’s how... it translates to poor financial management.
Two big temptations when you start your own business are to say:
- Everything needs to be the best if we are to be the best! This however usually means expensive and start-ups don’t have this luxury regardless of the size of the cheque. Be aspirational definitely but don’t over reach be realistic in your approach to what you need.
- I want to make this the best place to work ever! Again this usually means expensive as people get carried away with filling their space with toys to keep staff happy and motivated. Worry about keeping them paid to start with, the rest will come.
The only way to avoid getting swept up in the high adrenaline head spin that comes from that first investor cheque is to have a plan. You need to know exactly where every one of those dollars is going, each one with their own carefully planned mission to catapult you into the next stage of your business’ success, exactly what the money was intended for.
The problem is without a carefully detailed plan and a disciplined approach to executing it, much of the money intended for business growth gets wasted. The results are not always as dramatic as complete disaster, but it can in more subtle cases mean that businesses are not hitting their full potential and that is still a wasted opportunity that could be avoided by getting your head straight from the beginning.
Having a detailed plan for your finances will also greatly improve your chances of obtaining finance. Financiers and investors are in this game to make money... they follow the dollar. If you can’t tell them where the money is going, how it will be used, and how it will be returned plus more, then you will find it hard to get them to listen to you, regardless of how good your concept is.
The moral is: have a plan!
Look out for next week's post by Marcella Merck, all about investment. Contact Marcella through her website www.merckbusiness.com.