I recall the day I climbed aboard Doug Richard's handsome vessel, the School for Creative Startups. Though I knew it would be no pleasure cruise, staying afloat while starting my own business is much harder work than I anticipated - a realisation that is only just beginning to sink in.
There I was: panama, bowtie and linen suit envisaging myself as a fin-de-siecle gentleman sailor, perhaps being mistaken for captain or admiral Dickie - only to find out this was no QE2 and told that it's all hands on deck when it comes to running your own business.
Doug pointed out that all businesses need people who can sell, deliver and organise. Of course on a large ship each crew member may play a different role but as most start-ups are sole traders in lone vessels they must cover all these things and more. Suddenly I felt my dinghy deflate as I realised I would have to get to grips with accounting.
Luckily, Doug Richard is no pirate. Yes, initially I imagined him gold-toothed and black bearded shivering my timbers but I was wrong. Appearances can be deceptive and Doug is a mariner of the highest order teaching us how to navigate the choppy waters of profit and loss.
He has consistently explained figures and numbers in an easy-to-understand manner, not being perturbed when faced with tiny, insignificant sales figures. Doug's on-the-spot calculations made our projected losses appear positive, allowing us to see land ahead as he stressed how important it is for businesses to face this truth no matter how small or negative the figures may seem. Having something down on paper allows a much easier overview of your business; something a bank or potential investor will demand anyway, but they will also appreciate an honest realistic insight into the business.
Talking us through an example of the accounts of a children's clothing designer he listed her costs and outgoings, both fixed and varied. These were 'liabilities', he said, while her assets were just 'stuff' like her computer, stock and desk. He then listed roughly how many sales she conducted per month recognising that some months are busier than others and added all these figures up. Unfortunately those figures on paper at indicated a loss but Doug didn't seem concerned and told us what he had created was a 'calculated cashflow forecast'.
With this info now on paper he adjusted the sales figures to both +20% and -20% creating two 'judged cashflow forecasts' allowing us all to see worst case scenarios but also areas of saving and core strengths and so while not perhaps quite ship shape and Bristol fashion it was also not quite the walk along the plank we were all expecting.
Therein lies the answer to one of the most frequent questions of any start-up. If profit and loss statements are historical (after all they only ever deal with last years figures) then how do I create a forecast when I have no previous sales?
So there I was, clinging to a buoy on the high seas when Doug shouted 'climb aboard'. It may seem obvious to put figures down on paper but for many start-ups it is a scary proposition full of the unknown requiring you to make assumptions. However like any worthy seaman you would not set sail in uncharted waters without plotting a course first and, yes, you may be blown off route occasionally and you may feel cast adrift with no oars.
What I have learned is that whether you are a tall ship or a luxury yacht, a catamaran or canoe, the preparations to set sail are the same and the rocks are just as treacherous for big ships as they are for the life boats.
For more about School for Startups click here, www.schoolforstartups.co.uk