At the end of year two, things seem to be going well – but you'll need to do some hard thinking if you want them to stay that way
The second year end has passed; you can now breathe a sigh of relief and persuade yourself that the business is now established. There is harmony on the home front now that the better half is winning the bragging rights in her social circle. There is even talk of sending your youngest to a fee-paying school, as his teacher has advised that he has learning difficulties. From your close observations of his work ethics, you had concluded that he was just lazy. Still you are not too disillusioned with the teacher's prognosis.
Where do you go from here? Before you got started, a close friend, the one with the degree in business management, strongly advised you to prepare a business plan as a first priority. He never tired of quoting the old chestnut of a failure to plan is a plan for failure. Securing a quick pay day to satisfy the mortgage and other pressing items of expenditure, in your view, came well before any business plan. Survival was the name of the game. Still it seems the time is now right to start giving some thought to the direction in which you are going and where you would like be in 1, 2 and 3 years time.
Currently your total fee income is just north of £200k per annum resulting from your efforts and two part time freelancers. You are still operating from home using a Regus virtual office for message taking and providing a room for business meetings. It has its drawbacks, however. Storage of files, reference books and the like is becoming a problem. The shed in the garden seemed like an acceptable solution at the time, but something more appropriate is now called for. Your office at home isn't big enough as a working environment for more than one person and with the larger jobs being secured; there is often a need for two and even three to work closely on a project. This will have to wait for the time being, but with the level of work coming in, another pair of hands will soon be required. However, if progress is to be made, an office needs to be secured. With an office comes the need for a multitasking administrator, possibly part time. This all comes at a cost.
It is easy to produce a business plan based on a wish list which is devoid of reality. When you have done a few sums as to the cost of a small office with a part time administrator, you realise that just to stand still financially, will require an addition to the existing profits of circa £40k, just to pay the additional costs. What you need is that big additional commission, which will require an extra two pairs of hand and you will have cracked it.
You need a decent cocktail of optimism seasoned with realism. Two more freelancers and a good injection of work and in six months time you could be in a permanent office. This will put a dent in the cash flow, but you have been very attentive to this matter so far and cash-flow, despite forebodings, has never been too much of a problem. You feel that the cash-flow could cope with the strain of growth of this magnitude.
That takes care of the first six months on the business plan; it is now time to get on with the next two and a half years.