Saturday, February 4, 2023

It Takes A Village: Knowing What To Ask and Who To Ask It To When You Start Your Own Business

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In partnership with BNZ

When you start your own business, you can often be swamped by all the ‘supposed tos’ that you think you need in order to get it off the ground. When Capsule started in May 2020, it was created in a time of chaos (lockdown + redundancy = panicked momentum) and our business plan really reflected that, in that our plan was to start immediately and come up with an actual plan later.

But 18 months into starting our own business, we’ve now got a couple of key lessons we’ve learnt along the way and we’ve teamed up with a BNZ Business Partner to share some important tips on how to start and run a business.

There is no one-size-fits-all strategy when you start your own business, as anyone who has started a business will know. Some people have a side project they nurture for years before taking the plunge into going full-time. Others might start a business because they lost their main source of income and rent is due in a fortnight (*raises hand*).

But 18 months into starting our own business, we can now tell you two things we’ve learned for sure. 1) The idea of ‘fake it till you make it’ isn’t just reserved for panicked journalists starting a website, it’s actually a shared strategy felt by the majority of business owners who are also often feeling pretty overwhelmed by everything. So, if you’re feeling intimidated by the idea of starting your own business, well, you’re in good company.

2) There are no stupid questions and the more you ask, the more you learn. When you start a business, there is going to be a lot you don’t know – and that’s absolutely fine. Having the courage to ask questions is key (and sometimes, keep asking them until you understand the answer). It’s not about knowing all the answers, it’s about knowing where to find them.

There are no stupid questions and the more you ask, the more you learn. Having the courage to ask questions is key (and sometimes, keep asking them until you understand the answer).

As part of our BNZ partnership, we’ve had access to some of the smartest brains in the business and between their know-how and our learned experience, we can help cover some ‘help me, what now’ business questions you have.

“How much money should my side hustle/business be making before I take it full time?”
“As there isn’t a ‘one size fits all’ answer to this question, there are a huge number of variables that come into play,” says Courtney Manning, a Business Partner at BNZ. “For making a big decision like this one, we’d recommend sitting down with a financial advisor to get some solid guided advice that is tailored just for you and your company.”

This was one of the biggest challenges we faced immediately at Capsule because the three of us had wildly different financial situations and responsibilities, but we all had one thing in common – we needed a job and we wanted the agency that came with starting up our own business. For half of Capsule, this was the second giant restructure they had gone through – and second redundancy – and the constant stress of working in an industry that could literally change on a day’s notice.

In order to stay afloat financially while we started Capsule, we all had to take on other part-time jobs or pick up freelance work to keep the rent paid. This meant a lot of crazy hours – and absolutely no weekends – for a really, really long time. But when we landed our first client, GOOD GOD was that money sweet. Slowly but surely, the ratio of Capsule vs other work changed and now Capsule is able to cover a full-time salary for each of us.

Are we making millions? No. (Do we think we would make good millionaires? Of course! Humble AND practical.) Did we each have to watch every dollar we spent like an absolute hawk for a very long time? Yes. But when Aotearoa plunged into Level 4 again this August, we all breathed an absolute sigh of relief that we were no longer stuck in jobs that were made literally impossible by lockdowns – and that we weren’t at risk at being made redundant again via Zoom. In this climate, that relief is priceless.

Once you get control back over your time and you feel actively engaged in the work you’re doing, you’d be surprised at how much you’re willing to forgo financially in order to hold onto that control.

Only you know how much money you need to get by versus how much money you need to be able to live a fancy life (trust us, those are WILDLY different sums of money). You can use this handy BNZ guide to calculate the cost to start your business, even just to give you a ballpark figure to think about.

An extra note: do not underestimate how much money you might be frittering away because your current job is making you sad/mad/sick. Once you get control back over your time and you feel actively engaged in the work you’re doing – and there’s no boss to make you redundant – you’d be surprised at how much you’re willing to forgo financially in order to hold onto that control.

“I want to do something creative. Are there any bank managers for specific industries?”
“Throughout the bank there are various lending specialists in areas such as Technology, Agriculture, Health and Professionals – as these are specific and somewhat niche areas of lending,” says Courtney. “Aside from this, there are many lending specialists who can assist with creative ideas by gaining an understanding of different businesses and applying standard lending fundamentals.”

“We have a home loan. Is it better to stick with the bank you know, or shop around?”
“By sticking with one bank your bank and banker has a holistic view of your financial situation and can better serve you by having a clear understanding of your financial position,” Courtney says.

“I’ve got a good idea but how do I know if it’s going to make money?”
Whereas a bank manager is great to get on board to help you set up your accounts and come up with a business plan, these kind of early days questions are more suitable for a financial advisor or an accountant. There are some great free resources online at Business Moments – BNZ, like how to research the viability of a business idea or the importance of advisors for small business.

“How do I go about setting up business accounts? Is it straight forward?”
“First determine whether you’re going to operate as a sole trader, a partnership or a limited liability company,” says Courtney. “From here we can complete the straightforward on-boarding process. This involves understanding the business structure, who is involved, meeting anti-money laundering requirements and completing the KYC [Know Your Customer] process. We’re here to make it as easy as possible and help businesses setup accounts while meeting various guidelines and regulatory requirements. At BNZ we have a dedicated on-boarding team to help with this process.”

This is a great time to also remember Capsule’s ‘there are no stupid questions’ mantra; check back in with our very first BNZ partnership story where we kept kicking ourselves for not going through this official process earlier, because it really helped solidify what our business was and what we wanted it to become.

You don’t have to be a financial expert to start a business – you just need a good idea, a good plan and a good attitude.

“Who should I talk to if I need a loan in order to get my business off the ground?”
If you’re thinking of getting a business loan, Courtney says it depends on what the business loan is for when it comes to what ratio of money should you have saved vs. business loan amount. “Generally speaking, 40%+ equity is preferable.”

Have a chat to an accountant first, Courtney advises, to help with the planning and financial forecasting of the business. Then engage with BNZ, who will be able to put you in touch with an appropriate lending specialist to help with a suitable lending structure for your business.

“Do I need to be good with numbers to run a business or can someone do that for me?”
At Capsule, we have a joke that some of us are so bad with money that our brains literally turn into the Homer Simpson monkey brain gif. In fact, we have re-enacted this gif in front of our bank manager and you know what? They loved it.

But no – you don’t have to be a financial expert to start a business – you just need a good idea, a good plan and a good attitude. There are other people that can help you with the things you need (Remember: there are no stupid questions!) “No, you don’t need to be good with numbers,” Courtney says. “Employ people that can do what you can’t, work out where your time is best spent to maximise productivity.”

This article is only for your information. It’s not professional advice (financial, legal, or otherwise) and can’t be relied upon. If you do use or rely on it, then no one, including BNZ, is liable for any resulting losses (both direct and indirect). Opinions may not be the same as BNZ (or anyone else). For help, please contact BNZ or your professional advisor.

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