Dos and Dont’s to be Considered
Have a Game Plan.
- What is the product or service? Location, home or in a known shopping area? Having access to the business is very important. Who are going to be the workers? The new business will be time consuming and usually stressful. Are you ready for this?
- What is your financial/business plan? Where is the money coming from, Savings-Family-Your friendly banker? If family/friends/banker, they are now your partners. Even if you did not intend for them to be involved, they will.
- Your financial plan needs to be in writing and should have a line for each expenditure, including the Salaries to be paid and Advertising/Marketing/Web Site. A detailed financial plan will provide the break even point for the business also known as the “Nut”. Once the “Nut” is covered, the business will start to throw off cash i.e. working capital. Until that point is reached, the business owner(s) need to provide the needed working capital.
- Who are the vendors that will provide the product you are going to sell? How many are there for you to choose from? What are their terms of payment? Are the terms long enough for you to sell their product and for you to get paid, before they are to be paid? This is all about working capital, the life blood of any business.
- Don’t forget about paying taxes. Who will do the financial reporting, a bookkeeper or accounting service? They all cost money and need to be in your financial plan and are a part of the monthly “Nut”. Do not forget attorneys and insurance, a necessary evil if you are to make it past your first year. Pay strict attention to any lease or rental agreements that you sign. Look for things like – Who pays if the AC goes out? Who is responsible for electric wiring-Mold-Cracked front steps? Removal of graffiti, flower beds and cutting the grass, snow and ice removal?
- Further Dont’s – Never underestimate costs including monthly rent. Never over project sales. This just digs the hole deeper. A business loan always takes longer than you expected. Let’s not forget the competition. If you came up with a good idea, then others can too. How can you distance your business from competitors?
- Do not expect family and friends to be your first and best customers. History indicates that many of them do not want you to be a successful business owner. You being a success brings out the worst in many. It’s called jealously.
