However, even for businesses that have made a firm commitment to move their accounting processes to the cloud, one key issue remains: how to make the best of your cloud accounting software.

In this regard, one of the primary issues that should concern you and your business is how to ensure that your cloud-hosted data is safe. Although cloud technology service providers often implement high-grade data protection measures, you should know that the responsibility for protecting your data goes both ways.

In this article, we will discuss what you should understand about data security and why it is important. We will also explain 7 tips that can help you maintain the integrity of your cloud accounting data and protect your business.

What is data security?

Data security, according to McAfee, “is the process of protecting data from unauthorized access and data corruption throughout its lifecycle.”

Data security simply means taking all measures to ensure the safety and integrity of your data. It covers approaches that protect your data itself (such as encryption) or measures that keep the data in a well-protected environment (like secure storage).

Yet, data security is one of the biggest challenges that data creators and hosts have in today’s world. To get some perspective on just how much of a concern data security really is, consider that some of the biggest names around (with arguably the strongest security protocols available) have been breached. Juggernauts like Microsoft, Apple, Google, Dropbox and Amazon have all fallen victim.

At home in July 2019, Brazilian hacker, VandatheGod breached the security protocols of 11 government websites in less than 12 hours.

Why is data security important?

It’s obvious really. Without taking adequate measures to protect your data, your financial information becomes fair game for anyone with a passing interest in it. Who would want to be interested in the financial data of a tiny mom and pop store in a little corner of Trinidad and Tobago you say? Pretty much everybody, and here’s why.

In the world we live in today, information has surpassed basically every other resource to become the most vital commodity on the market. Hackers generally don’t need your data for its intrinsic value. Rather, they are drawn to it because of the money they can make by selling that data.

Even if they cannot sell your data, there are a million ways in which they can use that data to hurt your business, and even you and your employees personally. They can open loan accounts in your business name, enter into fraudulent contracts with your own clients and basically make life very difficult for you. In fact, if given too much leeway, the loss of your data may lead to financial (and reputational) ruin for your business.

Now that you understand exactly what is at stake if your cloud accounting data is compromised, let us turn to what you can do to minimize this risk.

How to protect your cloud accounting data

The first thing you should understand about protecting your cloud-based financial data is the role you and your employees must play. Data security, while being primarily the responsibility of your cloud service provider (CSP), also falls squarely in your court.

To really be satisfied that your data has the best protection possible, you need to do your own part, just as your CSP does. That’s where these tips come in. Here’s what you can do.

#1: Create strong passwords 

Here’s a stat that will shock you. According to Info Security, 90% of passwords can be cracked within seconds. If that didn’t leave a cold tingle down the back of your neck, then congratulations. You must have passwords made of titanium. But if you don’t, the first step to data security is creating some high-grade strength passwords.

They say no battle plan survives first contact with the enemy, but this is a failing you cannot afford with your passwords. Make sure you use a combination of letters, numbers and special characters for a strong password. You’ll find other tips on creating strong passwords you can use here. It may also be advisable to consider implementing a business policy where all employees are required to change their passwords every 90 days.

#2: Don’t share your passwords  

This should go without saying, but it is something that far too many people find themselves guilty of. Just so you know, sharing here is not restricted to only whispering your password to someone else.

Storing your passwords in an Excel, Word or other documents and writing them down where they can be seen or stolen are both examples of bad practices you should avoid. Eventually, they pretty much amount to sharing your password with someone that may or may not spill them eventually. It will also be beneficial to create separate user accounts for each staff who requires access to your cloud data instead of sharing one general account name and password.

#3: Implement two-factor authentication

Two-factor authentication basically means an extra layer of security over your data in addition to your password. When two-factor authentication is enabled, your data can only be accessed after providing the password and another means of authentication such as fingerprint scan, face scan, pin number or security questions.

Although it is not always necessary (especially if you have stronger measures in place), it can be a great measure for ensuring the integrity of your data.

#4: Install virus /malware detection software

One of the weakest points through which your data can be compromised is through the end that you control: your computer. Threats such as viruses, malware, worms, rootkits, ransomware and phishing attacks are usually perpetrated locally.

If your local protection is not up to scratch, your data might end up being compromised through your end. Invest in strong antivirus software that guarantees protection both through your computer’s hard drive and on any network it operates on.

#5: Adopt user permissions

It’s a popular saying that “dead men tell no tales”. This most definitely does not mean you should go kill all employees with access codes to your data. However, by limiting knowledge about and access to sensitive information, you drastically reduce the probability that it will get leaked.

In addition, if there is a leak, it becomes much easier to trace the source since only so many people had access in the first place. How do you set this up? By utilizing user permissions on your CSP software. With user permissions, you can control exactly who has access to what and how much access they have.

#6: Ensure that your cloud service provider uses data encryption

When data is encrypted, it becomes entirely unreadable, except to someone that has the key. You could say encryption basically scrambles your data to make it look like gibberish to someone who doesn’t know what to look for.

Most of the best CSPs provide data encryption options as part of their security measures. By encrypting your data, you add an extra layer of security so even if the data is somehow stolen, it will be unreadable without possession of a key.

#7: Educate your employees/users

Although this is the last point, it is essentially the most important. There is no greater risk to data security than the humans who use the data themselves. No matter how strong your data protection measures are, a single error by one of your employees will expose your data faster than you can say “hack”.

Thoroughly invest in educating your employees and users about the importance of data security and standard measures to take. Make sure they learn how to recognize risks and act appropriately so that your other data protection measures will not be in vain.

Conclusion

In conclusion, while cloud accounting has all the tools to launch your business to the next level, you must do your part in protecting your data integrity. Implement these tips and you will be well on your way to ensuring that your data remains secure and uncompromised. Some of you may be wondering whether migrating to the cloud leads to greater possibilities of security breaches. The reality is that no data is ever completely secured. However, the security protocols adopted by your CSP will always be more extensive than what you will be able to implement on your local network servers.

Are you considering implementing cloud technology and worry about whether you’re able to successfully execute proper data protection strategies? Worry not. Schedule your free consultation today to speak to one of our cloud implementation consultants.

As a business owner, we hope by now you should be aware that there have been amendments to the Companies Act to include this issue of disclosing the beneficial owners of a Company. If you are not aware, however, it may be a great time to consider the reasons why your small business should have an accountant or legal professional as an advisor.
 

So, what do these amendments mean for Limited Liability Companies and should you be concerned? Simply put, there are now new reporting requirements and obligations for directors, officers and shareholders of companies incorporated locally in Trinidad as well as externally formed companies. It must also be stated that failure to meet these obligations can rack up some hefty fines and even jail time.

This article provides clarity on what a beneficial owner is as well as the obligations of directors, officers, and shareholders of a Limited Liability Company.

The Companies Amendment Act 2019

The obligation to disclose and report on beneficial ownership was created by the Companies Amendment Act (CAA) 2019 which was assented to by the Parliament on 4 April 2019 and proclaimed by the President on 30 May 2019. Essentially, the CAA requires companies to ascertain and obtain information on the true (beneficial) owners of a company and disclose the same to the Companies Registry using the prescribed forms.

What is a Beneficial Owner?

According to the Financial Action Task Force (FATF), a beneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.


For the purposes of the Companies (Amendment) Act, the following guidelines apply to ownership and control when determining the beneficial owner of a Company. They are:

• The natural person who directly or indirectly through an intermediate holding company owns shares in the Company;
  
  

• In the event that a natural person cannot be identified as the owner whether directly or indirectly, the beneficial owner shall be deemed to be the natural person who exercises control over the Company;
  
  

Control is defined by the CAA as:

• The holding of shares or the possession of voting power in relation to that body corporate;
  
  

• Any other power conferred by the Articles of Incorporation or other documents regulating the body corporate, that the business affairs of the body corporate are conducted in accordance with the wishes of that person;
  
  

Where no ownership or control can be identified the beneficial owner shall be the natural person who holds the position of senior managing official.

Reporting Obligations of Beneficial Ownership

The reporting requirements under the CAA are applicable to all companies incorporated under the Companies Act inclusive of external companies except for publicly traded companies on the Trinidad and Tobago Stock Exchange.

Companies are now required to carry out the following obligations under the CAA:

• Issue a notice via Form 40 to all shareholders of a Company to declare the beneficial owners holding any interest in the said Company;
  
  

• Ascertain the names, addresses, occupation, nationality and nature of interest (whether direct or indirect) of each Beneficial Owner with an interest in the Company;
  
  

• Maintain a Register of Declarations submitted to the Company by shareholders and beneficial owners;
  
  

• Prepare and file to the Companies Registry a Return of Beneficial Interest in the Shares of a Company (Form 45) within 30 days from the receipt of a Declaration of Beneficial Ownership (Form 42) from a Beneficial Owner or receipt of Declaration of Non-Beneficial Ownership (Form 41) from a shareholder.
  
  

• Prepare and file to Companies Registry a Return of Issuance or Transfer of Shares (Form 46) within 30 days for the issuance or transfer of shares.
  
  

• Verify the recorded information at the Companies Registry via the filing of the new and updated Annual Return (Form 28).
  
  
  

Summary of Penalties for Non-Compliance

The penalties for non-compliance with the disclosure and reporting requirements of the CAA as it pertains to the issue of beneficial owners are as follows:

• A company that fails to take reasonable steps to ascertain its beneficial owners will be guilty of an offence and it, along with every director and officer, will be liable on summary conviction to a fine of $10,000 (and for every day for which the offence continues a further fine of $300) and to imprisonment for three years;
  
  

• A person who fails, without reasonable cause, to submit a declaration commits an offence and is liable on summary conviction to a fine of $10,000 (and for every day for which the offence continues a further fine of $300) and to imprisonment for three years.
  
  
  

Conclusion

It is common for company directors and officers to become so consumed in its day to day operations that they lose sight of statutory compliance with the Companies Act. This can lead to major consequences in the forms of tens of thousands of dollars in penalties and fines.

The filing of documents related to beneficial ownership with the Companies Registry is now part of the overall duties and responsibilities of your Company Secretary. At FirstLink Business Solutions Limited, we can assume the responsibilities of your Company Secretary ensuring that your obligations under the Companies Act are carried out. We urge all directors and officers to contact us today to Schedule A Free Consultation.

In a previous article, we looked at the process of registering a company at Registrar General in Trinidad and Tobago. Today, we look at 8 post registration legal requirements if left unattended can break your pocket or cause great headache. They are:

1- Appointment of Company Secretary

Section 61 of the Companies Act, Chapter 81:01 requires the appointment of a company secretary and the subsequent filing of the relevant document within 30 days of their appointment or where an individual ceases to act as the company secretary. The directors of a company will usually appoint a company secretary through a board resolution. In some situations, however, the byelaws of the company may make provisions on how a secretary is appointed. If there is a stipulation within the byelaws, then its provisions must be adhered to. The secretary of a company can be an individual, firm (partnership) or company.

A director or authorised officer of the company will be required to complete and submit a Notice of Secretary or Notice of Change of Secretary – Form 27 at the Companies Registry. There is a processing fee of $40. Failure to file the Notice of Secretary within the stipulated timeline will attract a penalty of $300 for every month or part thereof that the person or company fails to deliver or file the document to the Companies Registry.

2- Changes of Registered Address

Section 176(2) of the Companies Act, Chapter 81:01 requires that a company notify the Companies Registry via a Notice of Address or Notice of Change of Address of Registered Office – Form 4 of any change of its registered address within 15 days. All companies registered under the Companies Act must maintain a registered office within Trinidad and Tobago.


The directors, however, may change the address of the registered office at any time. Failure to file the Notice of Registered Address within the stipulated timeline will attract a penalty of $300 for every month that the person or company fails to deliver or file the document to the Registrar General.

3- Filing of Annual Returns

Section 194 of the Companies Act requires that an annual return must be filed no later than thirty (30) days after each anniversary date of the incorporation/ continuance of a company. An annual return provides an update of the company’s registered address, shareholding, directors, secretary, debt, and beneficial owners.

An authorised representative of the company is required to complete and submit an Annual Return (Profit) – Form 28 to Companies Registry.

It is important to note that a company must prepare and file this document to Companies Registry regardless of whether it has been trading or not. Furthermore, please be aware there are different forms for profit and non-profit companies. This document also incurs a penalty of $300 per month for the failure to file within the stipulated timeframe.

4- Return of Issuance or Transfer of Shares

Section 337D(1) of the Companies (Amendment) Act 2019,  requires that companies complete and submit a Return of Issuance or Transfer of Shares – Form 46 to the Companies Registry. This document must be filed within 30 days of the issuance or transfer of shares by a company.

The return details the class and number of shares, amount of capital, name of the shareholder (whether an individual or company), address or registered office, occupation or status, nationality or jurisdiction of incorporation, date of registration and beneficial owner of the shares.

Where a company fails to comply with the filing of the Form 46 within the stipulated timeframe, every director and officer is liable on summary conviction to a fine of ten thousand dollars and to imprisonment for three years and for every day in which the offence continues, a further fine of three hundred dollars.

5- Return of Beneficial Ownership

Section 337 of the Companies (Amendment) Act 2019 requires companies to ascertain and obtain information of the beneficial owners of locally incorporated and external companies with the exception of public traded companies on local stock exchange.

This information must to be disclose to the Companies Registry by the filing of  Return of Beneficial Interest in the Shares of a Company – Form 45 within 30 days of the receipt of the statutory declaration from a beneficial owner or shareholder.

There are significant penalties for non-compliance which upon summary conviction includes a fine of $10,000 and an additional fine of $300 for every day which the offences continues along with imprisonment for three years.

6- Application for BIR and PAYE Number

It is mandatory for all companies to obtain a Board of Inland Revenue (BIR) and Pay as you Earn (PAYE) number. A BIR number is used for payment of taxes while a PAYE number is used to remit taxes withheld from employees under the Income Tax Act.

To obtain a BIR and PAYE number, a company must complete an Application for Company File Number, PAYE Number and VAT Registration and submit it to one of the Board of Inland Revenue Division offices in Port of Spain, San Fernando or Tobago. There is no filing or processing fee for this service. The signed application form must be submitted with the following:

• Original and copy of certificate of incorporation;
• Original and copy of notice of directors;
• Original and copy of notice of address; and
• Copy of one form of photo identification for each director.
  
  
  

7- Application for VAT Number (if applicable)

Sections 20 and 21 of the Value Added Tax Act makes provisions for all registered businesses in Trinidad and Tobago with commercial supply of over $500,000 to become registered under the Act.

The form used in the registration of a VAT number is the same as the one used for BIR and PAYE numbers. The signed application form must be submitted along with the same documents required for the BIR number but with the following additional documents:

• Copies of bank statements showing deposits of more than $500,000 over a twelve-month period;

• Copies of sales invoices to be used as evidence of trading.
  
  

An unregistered person who makes a commercial supply of over $500,000 within a twelve-month period and fails to register for VAT commits an offence and is liable on summary conviction to a fine of fifteen thousand dollars and imprisonment for one year.

8- Application for National Insurance Number (if applicable)

From a legal perspective, a company is a separate entity from its shareholders (owners) and its directors. As a result, a company is seen as an employer and must apply for a National Insurance number once employees exist inclusive of the directors.

Section 29 of the National Insurance Act makes provisions for both employers and employees to become registered under the Act. Employers are required to fill out a NI 1 form and submit to it to any branch of the National Insurance Board (NIB).

Upon submission, the company will be contacted by a Compliance Officer at the NIB who conduct an audit on the company ensuring it meets the requirements for registration under the National Insurance Act as well as explain the employer’s obligations under the Act.

It is important to note that on the commencement of employment with a Company it is best practise to ensure that employees complete and submit NI4 form to National Insurance Board to ensure that during their time at the Company their National Insurance number is linked to it.

An employer who fails to register with National Insurance Board shall be liable on summary conviction to a fine of five thousand dollars.

In conclusion, starting a business can be very time consuming and overwhelming. However, regardless of where the wind carries you and your company, please do not neglect the above post registration legal requirements as they can lead to tens of thousands of dollars in fines and penalties. If you need any assistance filing any of the requirements contained in this article, schedule a free consultation today and speak to one of our competent advisors.

The US Bureau of Labor Statistics equally reports that 20% of small businesses fail in their first year, 50% fail before they clock 5 and only 30% make it past the ten-year mark. As far as these statistics go, the world of small business is a dog-eat-dog world and if you’re not careful, your business could go under faster than the Titanic.

But what really causes this startling failure rate. Is it because these businesses started out selling the wrong product? Did they get their pricing wrong? Was it because of poor management? You don’t see a lot of articles dwelling on why these businesses fail but that’s exactly what we’re going to do in this article.

We will examine the most common reasons that experts have pointed out for the failure of small businesses so your business too can learn and avoid them. Here are our top reasons for why most small businesses fail.

#1: Lack of Cash

This is one of the most common reasons for business failure, and also the most painful. It can be difficult to swallow, but so many businesses fail simply because they were not able to generate enough investor interest or cash flow to stay afloat. A business can run out of cash by failing to raise sufficient initial capital to cover startup expenses or failing to generate enough cash from operations to cover day to day expenses. The statistics also bear this out.

As Investopedia reports, of the vast number of small businesses that fail each year, more than half state that a lack of funding was to blame.

If your business is to survive long enough to be successful, one of the first things you will have to carefully map out is your plan to get capital and achieve free cash flow. An accountant can play a significant role in ensuring that your business achieves this by properly estimating your monthly cash burnout rate which includes your directs costs, overhead expenses, investments in research, repayment of borrowings, as well as fixed assets such as machinery.

#2: No market need

Almost every failed business has been guilty of this at some point. You have a great idea that works beautifully on paper. But when you have shelled out on the idea and built a business with it, you discover that nobody actually needs what you’re selling. Although it seems like the perfect “face in the pie” moment, you’ll be surprised at how many make this mistake.

This is by far one of the most common reason why the startups fail. They focused more on tackling problems that are interesting to solve rather than focusing on those that serve a market need. As a business owner, it is an unforgivable error if you fail to take the time to conduct feasibility and market impact studies. More often than not, business owners who did these and still saw their business fail due to a lack of market need only failed because they failed to confront the truth. Nobody needed what they were selling.

To avoid this error, it’s best to work with an independent expert in conducting your feasibility and market impact studies with you. It is important to note that we recommend that an aspiring entrepreneur works closely with the expert or consultant. This is because the real value captured within a feasibility or market impact study is the data collected in the research phase which may include speaking with potential customers within your target market. So, work with a consultant and let them assist you in critically studying the industry and help you understand whether your business is barking up the wrong tree before you start climbing.

#3: Poor pricing

Although it sounds surprising, poor pricing has contributed to its share of small business scalps over the years. You spend so much time in creating a product, then you cut yourself below the knees by underpricing or overpricing. As a result, the business either earns far less than it should and becomes unsustainable due to underpricing or chases customers away with its overpriced product.

While the statement that every business should know its customer seems self-evident, that’s the exact error these businesses make with their poor pricing policy. No matter how much you want to change the world with your product, you can miss the boat by a mile simply by failing to understand your customer.

The best solution for businesses that are still afloat but facing this issue is to invest in customer research, analytics and reporting tools to understand the behavior and preferences of their customers. You’ll be surprised at how much you will understand just by investing in a sound Customer Relationship Management software such as HubSpot CRM, a market survey tool such as Survey Monkey and a bit of industry analysis from a competent consultant.

Another essential strategy is to engage an accountant to ensure a proper bookkeeping and accounting system exists to understand the full cost of your products and services inclusive of overhead contributions. The overall cost structure of a business is usually one of the major factors for establishing an appropriate pricing strategy along with understanding your consumer demand, pricing of competitors, and the overall price sensitivity of your product.

#4: No business model

Another big reason why small businesses fail is because they simply do not have a plan. As weird as it sounds, so many businesses are guilty of this. They do not have a sound business, financial or marketing model and most pay the ultimate price due to this omission.

A strong business model is essential as it helps the company chart its course and determine how it capitalizes on strengths and opportunities. However, a common trait among many failed businesses is that the founders did not have a solid business model.

The majority of new disruptive businesses over the last decade or so have not been created by technology innovation but rather business model innovation. Think of Airbnb, which is the biggest accommodation provider in the world but does not own a single property or room. Or Alibaba which is one of largest online wholesale and retail companies in the world but doesn’t own any inventory.

When you’re starting your small business, you should know that doing is only half the work. Planning is a much more important element for success and as these stats show, businesses that fail to plan, only plan to fail.

To avoid falling trap to this common error, businesses should familiarize themselves with the Business Model Canvas developed by the Swiss business model guru Alexander Osterwalder and Management Information Systems professor Yves Pigneur. It is a great tool to map out and dissect the moving pieces of your entire business activities.

#5: Poor Planning

What’s worse than entering into business with no plan? No prizes for guessing. Yes, entering into business with a poor plan. Entrepreneurs often think entering into business is simply about finding a nice idea and selling it to others. But it involves so much more. We have always been amazed by local startup entrepreneurs who believe that proof of concept is their debutante ball paving the way to success and wealth.

Reality check, it is not! There is life after proof of concept and it involves actually running a business. Issues such as choosing the right business structure, post registration requirements, legal protections, tax filings, cash flow, and human resource management can sink your business overnight with disastrous long-term effects.

Proper planning will highlight potential problems that may arise in the course of the business, giving you notice and the opportunity to find a preemptive solution. While it is not compulsory to draw up a 100-page business plan (in truth, most of this is filled with unnecessary jargon), you should understand what you want to do.

Your business plan should clearly indicate your finance sources, marketing and promotional strategies and other important issues. Poor planning is a management problem and a problem like this will wreck businesses almost every time.

In fact, according to this research, poor management will wreck a business 7 out 10 times. It reports that 71% of businesses fail due to poor management, both in terms of planning and control of working capital. So, if you want to avoid failure for your small business, you must take your business planning very seriously.

#6: No Differentiation

The last reason we have for why businesses fail is because they don’t take the effort to infuse originality in their product. This is especially of major concern in places like the Caribbean. Here’s a question: If ten people all on the same street take to selling burgers and hot dogs, who will have the most success? Exactly. The person that takes the time to provide something different.

Too many businesses fail because they simply try to mimic other successful businesses without really understanding how they work. One entrepreneur brings out a new idea that has everybody in an uproar and then before you know it, 20, 30, 40 others have copied the same idea, effectively ruining the opportunity for everyone.

Here’s how Warren Buffet describes it: “First come the innovators who see opportunities that others don’t. Then come the imitators who copy what the innovators have done. And then come the idiots whose avarice undoes the very innovations they are trying to use to get rich”.

If you really want to make your business successful, you need to put plenty of effort and time into thinking up what will make you different. If you choose to follow the crowd instead, you just might be consigning your business to failure.

Conclusion

In all, the best service you can do your small business as an owner is to be smart, longsighted and quick to take action. If you keep stepping lightly and remain ready to innovate as the situation demands, you will be marking your 5, 10 and 20-year anniversaries before long.

As you’ve also seen, businesses cannot hope to attain much success without relying on knowledgeable professionals that can help their business. If you’d like to speak to one of our trained consultants about our advisory solutions which provides your business with valuable insights and strategies to ensure that it has the best chance of success, then schedule your free consultation today! You’ll be saving yourself and your business much more pain than you can imagine.

The unfortunate reality is most entrepreneurs do not truly understand the importance of creating a business plan. The value of a business plan is not in the plan itself but the process utilised in drafting the document. This process forces entrepreneurs to focus on essential elements of their business highlighting where it currently is, where it wants to go, and the specific strategies and tactics for how it will get there.

In circumstances where an entrepreneur needs a business plan for acquiring a commercial loan or equity investment from an investor then a formal business plan is a necessity. However, on too many occasions, many entrepreneurs are unsure about how a proper business plan should be written. Here are 10 elements that every successful business plan should contain:

1. Executive Summary

This section should be written last. It is, however, one of the most important parts of a business plan. The summary captures all the main points presented in the entire plan. In many situations, if the executive summary is weak, it may discourage others from reading deeper into your business plan potentially leading to the loss of many prospective opportunities. Therefore, entrepreneurs need to carefully and properly write their executive summary.

2. Business Description

This is also another crucial area of any business plan because everyone needs to know what the business is about, the products and services it offers, its vision and mission, and the goals and aspirations of the company. It should include the legal structure of the business, ownership, location and history if an existing business. Entrepreneurs need to describe their businesses in a clear and concise manner ensuring that all vague expressions that will leave people confused are avoided.

3. Products and Services

It is essential that entrepreneurs describe their product and/or service offering in the context of the problems or needs that their business solves for their target audience. Most successful businesses are able to identify their unique selling proposition, which is what makes your business unique or different from your competitors. It’s helpful to look at presenting the benefits of your products and services as opposed to just its features.

4. Market and Competitors Analysis

A successful business plan should always contain the results of a thorough analysis of the market. Performing a proper market analysis would allow the business to know its target market, their needs, and the prices they are willing to pay which is information that can ultimately determine success. They also need to conduct an analysis of the competitors in the market. One mistake entrepreneurs make is only considering people with the same business as their competitors. However, as long as a product can be substituted for something else, that alternative is a competitor. It is also critical to perform an analysis of the competitors to know their strengths and weaknesses so those areas could be avoided or exploited as required.

5. Sales and Marketing

This includes the strategies that your business will utilise to reach its target audience. It will state your business’ positioning in the market, its pricing policy, promotional strategies, distribution methods, and social responsibility. Many entrepreneurs believe that social responsibility should be undertaken by large businesses only. However, effective community outreach can be done by small businesses and provides very valuable free publicity through local and social media. This section should also include sales forecasts for a twelve-month period along with basic assumptions. Entrepreneurs should be realistic in their forecasts and growth projections as one of the easiest ways to discourage a potential investor is being unrealistic.

6. Operations

Entrepreneurs need to know how their businesses will operate on a daily basis, what needs to get done, how those tasks will be done, and most importantly, who will accomplish the task. A business has a variety of systems namely for dealing with customers, manufacturing products, managing finances, marketing and so on. Thus, it is vital that a well written business plan clearly highlights all its operations and systems, and how they will work together to have an effectively functioning business.

7. Leadership/Management Team

The management of any business venture is crucial because it can make or break the business. Therefore, entrepreneurs should always have the right people on board. If business owners do not have a particular skill, it is very important that they seek out a partner who is proficient in the area they lack to compliment them. While strong management is absolutely necessary in any business, the entrepreneur behind the business should possess very strong leadership skills, and the business plan should highlight the leadership capabilities of the person or persons in charge. Leadership is important because there is a big difference between a manager and a leader, and it will take a true, strong leader to fully get people behind him/her and in line with the mission and vision of the company.

8. Funding Requirements

One of the things that many entrepreneurs generally get very wrong is the amount of funds they would require to start their business. Consequently, it is imperative to conduct a thorough analysis to determine the amount of money needed for the business’ different campaigns, start-up cost, and operational cost for a specific period of time. Some entrepreneurs believe that their business will cover its overhead costs the moment it opens its doors. This is unrealistic and most times a buffer in the form of working capital is needed to survive the first few months.

9. Financial Summary

This is an area of great importance also. Entrepreneurs need to ensure that they take the time to conduct all the financial analysis necessary to present a strong and robust plan. All business plans should have at least a balance sheet, cash flow statement, and also an income statement. For existing businesses, statements for the last few years are compulsory, and for start-ups, projections for the next 3 years must be included. Projections must be realistic, and all entrepreneurs should conduct sensitivity analyses to ensure that even though the projected sales figures are not met then the business will still survive.

10. Risk Analysis

All entrepreneurial ventures contain risks which if not managed properly can lead to a business’ untimely demise. A business can be exposed to several risks such as legal, market, operational, management, economic or physical. It is important that entrepreneurs balance risks and rewards in their businesses during the planning process. This can be achieved by identifying the most important risks inherent to your business and what can be done to mitigate these risks. Thus, creating a Risk Management Plan is essential to the long-term success of your business.

Most entrepreneurs feel overwhelmed by the process of writing a business plan. While there is no concrete format that a business plan should take, the above elements have become standard in the modern business environment. It’s the format that we at FirstLink adopt when engaging in business planning projects with our clients. Once the above format is followed then there is a higher probability that you will create a successful business plan worthy of reading by any bank or investor. Are you in need of creating a business plan for a commercial bank or investor? Schedule a free consultation today to speak to one of our business advisors.