THE EXPERTS' ADVICE:ANNA, CLARE AND MAEVE have come to a crossroads in their careers. Although each of them would like to set up a new business, they each have varying financial commitments and resources to do this.

They should prepare a detailed business plan setting out the business proposition, identifying their target market and projected results for the first five years of their venture together with the detailed business, market and economic assumptions underpinning the plan. The plan should also identify what initial and subsequent working capital investment is required and how that investment is to be sourced. Potential finance providers will also insist on a detailed business plan as part of any lending decision. Local city or county enterprise boards or an accountancy firm can assist in preparing the plan and identifying financing options.

A key element of their business plan should be identification of the appropriate structure for their business venture, for example through a partnership or a limited company.

As each individual has varying financial commitments, the capital funding for the new business may be a mix of personal savings and bank term loans. The most significant matter regarding partnerships is that each partner is jointly and separately liable for all of the debts of the partnership. They also need to consider their respective personal financial status including other income earned and financial commitments and consider how any personal commitments impact the partnership. Each partners’ share of partnership profits is subject to income tax and the effective tax rate is dependent on their personal circumstances and professional advice should be sought on this matter. For these reasons it is vital that a legally binding partnership agreement is created to define roles and responsibilities together with capital contributions and profit shares.

An alternative structure for the business is to set up a limited company. In most circumstances, the shareholders of a limited company have limited liability from all the debts of the company. This structure may be more suitable to protect personal assets. A shareholders’ agreement should be put in place to formalise how the company will be owned and managed. It should deal with contingencies and include a conflict-resolution mechanism.

Anna, Claire and Maeve should meet with a solicitor and accountant specialising in start-ups to discuss their respective options and consider the structure best suited to their respective personal and financial circumstances. Professional advice is vital to establish the correct structure and organisation of the business to avoid future difficulties which could have a serious impact on the success of the business. – Dudley Neary

FIRST AND FOREMOST, what the three friends have to recognise is that it is highly unlikely that any start-up food business will be able to pay a significant wage within the first two years. As a rule of thumb, it will take years for the business to sustain a salary for one owner, never mind three.

The skill sets which the three entrepreneurs have are highly complementary, and one option they might consider is that they don’t all get actively involved in the business. This might be left to one, while the skill sets of the remaining pair are used on a more part-time basis, with perhaps the ownership structure divided in such a way as to reflect this contribution.

Next, they need to understand the potential demand for this product in the marketplace. Approaching the local Enterprise Board to discuss their idea and applying for a feasibility grant/mentor would be a good starting point.

A feasibility study should look at a broad range of areas and ask some key questions:

* Are there any other similar products in the market which can be benchmarked, either domestically or internationally?

* What is the value of the kids’ healthy snack market? (Bord Bia would be able to assist here.)

* What share of the market do they believe they would realistically be able to achieve?

* Most importantly, consumer reaction to the idea needs to be tested, and this would be best achieved through running some focus groups.

A simple way for the team to test their idea after the research phase, in a safe and cost-efficient way, would be to manufacture the product in a home kitchen environment and sell it at a local farmers’ market. This process is relatively simple and the first step would be to have discussions with the environmental health officer taking advice on the processes etc. This simple retail model would allow the group to establish very quickly if there was genuine consumer repeat business and would also allow them to tweak the product accordingly.

If the market is successful, it would then be time for the entrepreneurs to think seriously about large-scale production, and they would have two options to consider here: produce the product themselves or find an existing producer with the capabilities to make the product.

It may also be necessary to get some technical work done on the product at this stage to examine shelf life, nutritional analysis, etc. They may be entitled to apply to Enterprise Ireland for an innovation voucher worth €5,000 which, if granted, could be taken to several professional bodies who would conduct this work.

Starting your own food business can sometimes sound like an easy and romantic lifestyle. The reality is that, while there can be a good reward at the end, it can be a slow and costly road to get your product established. – James Burke

THE THREE FRIENDSare facing a cocktail of dilemmas in their personal friendships and in their family, career and business lives. This cocktail comprises Clare's desire for balancing a reasonable family-life with career commitments; Maeve's reticence about accepting a redundancy package, acknowledging she'll have to accept a lower calibre job; and Anna's concerns about the risks of investing her redundancy money in a fledgling food business with friends who collectively have no experience in the industry.

The friends are facing crunch decisions that will affect their friendship, their livelihoods and their families. It’s time to take stock of where they are in their lives, in their friendships and in their commitment to working together to build a business.

What will be required for any hope of success is the commitment of the team to building the business. That commitment may be absent for very good reasons in this situation, and it’s appropriate that they sit down and thrash out what they want and what they are willing to give to the team in return.

In advance of that, individually they need to reflect and consider their motivations in wanting to build the business, their risk appetite in terms of how much they are willing to invest in terms of money; their risk appetite in terms of maintaining friendships with each other and finally, an assessment of how much time they are willing to commit to the project, given their desires to be there for their young children.

Clare, in particular needs to drive this meeting. It appears that she was the initiator of the idea and has driven it forward somewhat in talking to Bord Bia and in actually developing product, if only for her own children.

Clare has thought through a positioning of the product as a budget-priced natural treat. Anna and Maeve seem to think that Clare’s assumptions are too optimistic. Clare, on the other hand, seems committed to the idea but appears to be less committed to going into business with her friends for fear that the enterprise might threaten their friendship and wants to structure the business to mitigate this risk.

There are simply too many incompatible constraints in the project. Clare seems highly committed, while Anna and Maeve appear less committed. One solution is for Clare to make the running with the idea and ask her friends for some level of financial support and perhaps counsel, but that the idea of a "partnership" poses too many risks to their friendship. Clare also needs to ensure that her assumptions are not unrealistic, and she should continue her discussions with Bord Bia and investigate the market and the competition in this area. – Prof Patrick Gibbons