Do you have an idea and you want to make money? Then start a business.
All businesses that are big today were, at one time, started small. I am typing this on Microsoft Word, a product of Microsoft that began in 1975 by two friends, Bill Gates and Paul Allen. It is amusing that IBM outsourced some work to a small company called Microsoft.
And at this moment, I found out that the market capitalization of IBM is US$117.45 billion, and the market cap of Microsoft is US$ 1trillion.
The point that I want to make here is that all businesses start small. Had those two friends not started that outsourcing business in 1975, they would still be working as senior coders somewhere. So, the lesson learned here is that if you want to make money, “take that first step and start a business.”
A business starts with an idea. Weaving a business around that idea is the core focus of business planning. You cannot make money unless you plan and execute the business in the right way. Hundreds of small firms that die before they ever really get going are because not enough planning went into the crystallization of the idea. There is a large number of resources available for such planning. You may also choose to engage a business consultant to help in the planning and execution plan.
Once you start your business and where most of the companies fail, is the area of record-keeping. When you start a new business, the entrepreneurs become busy in marketing, sales, innovation, product development, IT systems, and what else. An area that is neglected grossly is record keeping. Proper record-keeping and internal controls make solid foundations for business. But I want to tell you that it’s not an easy or exciting task, but it needs to be done and to be done well.
Keeping a proper record-keeping not only helps businesses but is also one of the requirements of tax authorities. When you file your tax returns, the taxman may come back and ask for underlying records to support the information you have provided them. A proper way to make sure that you have correct records is to keep books of accounts, do regular bookkeeping, and prepare financial statements on a periodical basis. This way, you can keep track of your accounts payable, accounts receivable, the profit you have made, and the money available to you. If you are unsure how to keep your books and prepare financial statements, you may get the help of business consultants to set up and maintain your accounting and bookkeeping system.
Accounting and bookkeeping is the first step towards gathering data that is relevant to your business. With information available from your records and external sources, you can carry out a variety of analyses. That can help you in reaching meaningful decisions such as whether to buy or lease the assets, borrow, how to price your products, credit terms, etc. I think I am justified in saying that in today’s world, the customer is not the king, but the data is king. You can use the data to choose your customers.
So, if you want to make money, plan your business, start it, and keep proper records. You may be another Microsoft 10-15 years later!
About the Author:
M Ashfaq Tahir is a CPA, Chartered Accountant, Chartered Global Management Accountant and Certified Financial Manager. Trained with one of the big four accounting firms, he worked in industry, consulting and investment banking. Tahir is a director of Onshore Advisors Ltd., Mississauga, Canada. Onshore Advisors is a network firm with four active offices in Canada, US, Pakistan and Bahrain.