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James Millar
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I’d estimate that about 8 out of 10 startups don’t seek professional advice prior to taking the leap and risking their money. The internet has certainly empowered people to be more informed but not unlike the effect in the medical industry, way too many people now self diagnose (DIY) with a limited understanding of all of the issues. This is probably why 8 out of 10 fail. We could have saved people tens of millions of dollars over the years if they engaged us to provide objective input (no BS) regarding their business proposition – focusing on the likely financial outcomes through careful analysis.

So to answer your question.

Firstly, I think you will find only a fraction of the relevant target (those considering starting a business) would actually make effort to complete your review process. The vast majority are committed to their business dream and frankly, in many cases no tool or professional advice is going to stop them. Or they are simply ignorant of the need to even evaluate these matters. Now you are probably thinking wow, could that many potential small business operators really have that poor judgment. Yes they do. (20,000 new companies registered a month and 10,000 deregistered a month. Add trusts to that as well). Sure they are not all failed businesses but hundreds (if not thousands) are. Our professional observation is that vast majority of small businesses fail to even return a market value salary to the founder. You only need to read some of the threads on this forum in the new business section and you will see that many are woefully unprepared.

Second. For the 2 out of 10 that take an objective and thorough approach to starting their business (including devising a professionally reviewed financial model), yes I think tools like yours may get some traction. As to what they would pay – that’s a tough one. Maybe a few hundred dollars if you could give them comfort that the outcome will definately be valuable. So it may need some sort of demo / sample mode to provide that comfort.

It reminds me a fantastic SAAS platform that we purchased about seven years ago. It was a failed NZ startup that had spent about $400k on a cloud business planning platform. This guys friend (Rod Drury) co-founded Xero at the exact same time. The tail of two different paths came down to one simple issue. Bookkeeping is effectively compulsory so Xero went on to be a great success. On the other hand, detailed business planning and management is considered optional and unnecessary by the majority of startups (the 8 out of 10) so planhq failed to get the global traction it probably deserved (it was a beautiful platform and well ahead of its time). For us it was a success because we sold it for many multiples of what we paid for it to a UK software firm. The point is that most small businesses don’t bother to plan which is why their software failed.

I think perhaps you should consider white labeling this solution for consultants, businesses coaches and accountants. Charge them for access because they are tapped into the minority that seek out and value detailed objective advice.

Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900