But until recently, the criteria for business mentoring required an applicant to be currently trading, which ruled out start-ups from the process. That has now changed with the introduction of a new programme, which is designed for people who have a business idea and and sometimes not a lot more.
As BNZ’s chief executive, Ray Schofield explains: `Where do you go if you are a budding entrepreneur? What do you do if you’ve got a great business idea, want to know how to turn it into a fully fledged business, and don't know where to start? What do you do if need a business plan for funding, and need confidential one to one feedback?’
The BMNZ startup programme has been designed for people wo want to explore their business idea in a confidential environment, want to know where to start and who to talk to. It aims to help them put the right foundations in place for their business through planning, preparing the necessary information and documents to present to potential investors to make the idea float and enable people to understand their legal obligations.
Ray Schofield adds: `The programme will help identify easily avoidable mistakes and provide much needed motivation, confidence and focus at a crucial point in setting up a business. Start-ups require a different approach from a business that is already trading - and we at Business Mentors understand this. For that reason, our Start-up Business Mentoring Programme differs from our standard mentoring offering. The Start-up programme provides six months of accelerated mentoring for a $300 + gst registration fee, which helps with the cost of administration. Up to March, with just four months since we launched this programme, we have helped over 100 new businesses find their way.’
Mentors with experience in business start-ups offer guidance, act as a sounding board, test the new business owners’ thinking, and support them in the development of a robust business plan.
Nick Sterling has been a business mentor for six years and was involved with the Pacific mentoring programme before he got involved with the Start-up initiative.
He says: ``I have done quite a bit of research on New Zealand and international businesses looking at the reasons for start-up failures. Depending on the research studies conducted by economic development agencies and business schools across most industry sectors, both in NZ and internationally, the Start-up failure rate is far too high, well-over 50% on average, and as high as 80% in some that do not make it past the two to three year period. It is a very high risk venture wherever one chooses to start a new business, and most entrepreneurs starting out fail to fully appreciate this until it is too late.'
Nick points out: `Most entrepreneurs start their own businesses to provide for their families, to build security for their retirement, to secure the future of their children, to have a better lifestyle and to make a greater contribution to their world. They have the deep inner passion and conviction to believe that they can do it. They believe in it so strongly that they either spend their redundancy money, their savings, take loans from friends and family, re-mortgage their homes, get seed funding, or a mixture of these options, to fund that dream.
`But I have found that many entrepreneurs, although very passionate and professional, have serious capability gaps to bridge in order to even undertake the business planning process properly.’
He explains that the ability to consistently focus effort and time on the new business is also essential in both adapting to a new process as a new discipline and in producing quality deliverables in a timely manner.
Nick adds: ‘Planning for and starting a business is said to be arguably harder than doing an MBA. The amount of time and effort required, in addition to the other existing commitments like work, family, leisure and other time constraints, cannot be realistically underestimated. There is also a serious risk of burn-out to be aware of.
• BMNZ’s research has identified a number of other common factors involved in Start-Up Failure. These include
• Knowledge, experience and general capability gaps in business and Management
• Planning, launching, managing, improving and growing a business, year-on-year, every year
• The need to source specialised skills and resources for specific functions within the business
• Not enough capital to support the business set-up, launch and get to break-even point
• Too much pride – and to realise that it is better to fail early, at minimal cost and impact then start again wiser, than to persist with a losing battle and fall harder down the line
• Going into business for the wrong reasons
• Wrong advice from friends and family
• Design too many concepts without proper commercial and market feasibility
• ￼￼ Lack of experience to negotiate with and to manage suppliers
• No knowledge of pricing and / or emotional pricing
Nick met his first Start up client fortnightly at a 24-hr MacDonald’s from 6 – 9pm, covering half business training and half business planning. He has found that most Start-Ups hit a big ‘realisation brick wall’ within a couple of weeks after the initial planning meeting when it dawns on them how much they do not know, how much they need to learn and apply, how much time and effort they actually need to invest in the business planning process, how much professional development they are required to do to get themselves to the skills standard needed, how much money they need to set-up and launch, how uncertain the business success still is despite all this.
He says: ‘It is useful for them to work on the ‘Why I want to start my own business’ element at this point, where the passion they feel for their business concept aligns with the reality of what is required to properly validate and to make the business concept successful (or not).
‘Getting the business owner to be commercially aware can prove to be a lengthy exercise and a tough mind-set shift to achieve. I support the client through some business training and professional development through online and reference material which helps achieve this as well as building the capability required to conduct the planning process and eventually manage a business in real life.’
Nick explains there is a range of benefits from the business planning process. The business plan produced can assist the entrepreneur in exploring seed funding as it provides a solid basis for the business concept to be comprehensively analysed.
Even if the initial concept is found to be commercially unviable, this is discovered early, at minimal cost, effort and risk. As a result of the market and financial feasibility studies, the original business concept may well alter to a more commercially viable one that has a better chance to succeed.
He says: `The Start-Up Programme supports entrepreneurs to learn about a professional business planning process, to enhance their existing business skills and management experience and for them to acquire new skills in all areas of their business, enabling them to be in a much better position to take their business off the ground and to make it success on-going.’
Ray Schofield is pleased with the early results of the programme: `Few other organisations in NZ, even in the private sector, come close to what BMNZ can offer in terms of support like this. For an entrepreneur looking at starting a new business, this should provide a degree of confidence and trust to the level of business and management support that they will receive through this Programme.
‘The Startup programme supports the entrepreneur to do all the required planning, identify and resolve most of the risks that would cause the business to potentially fail, before the business ‘goes live. The actual professional services costs to the business owner if the same support services were to be sourced privately would be in the order of tens of thousands of dollars over the lifetime of the business mentoring support offered by BMNZ.’