Years 2 to 5
After the first year, the entrepreneur must review the business plan and re-structure it if needed. The plan must be updated and all goals must be revised. The idea is to work on these goals in year’s two to five. In these cases, utilizing a business planning software product such as Business Plan Pro is helpful.
Entrepreneurs must formalize the procedures that were developed during the initial stage by getting things down, formally on paper from people’s minds. He or she must get the rules, procedures, goals, and operations down on paper in the form of a business manual.
Hire the first set of employees or hire some new employees if the business is growing. Write well-thought job descriptions for all old and new jobs to make sure the right people are hired. This would also help to develop the training schedules. It is also important to delegate the responsibilities and authority by hiring a management team, which can oversee the daily work and make day-to-day decisions. It is extremely important to have faith in the managers to make it easy for the work to be done efficiently.
It is also important to standardize the sales and marketing wing of the business by carefully presenting the right picture to customers. A consistent marketing message is crucial for differentiating the business from other established competitors and brands.
Initial business financing can be done with personal savings, bootstrapping, borrowing from friends and relatives, or even borrowing from a pre-existing 401K. However, as the business grows, the capital needs to increase, and new ways of funding are needed. By this time, the business becomes more attractive to banks, angel investors, and other financing sources. These institutional financial sources require many documents and thus it is important to follow strict bookkeeping procedures that include up-to-the-mark accounting reports that include cash flow projections, income statements, and balance sheets.
While choosing the right financer for the business, it is advisable to look at the various terms and conditions of the different types of financing. For example, banks like security whereas venture investors like to gamble and take risks to earn annual rates of over 35 per cent through sales or mergers.