Think Big. Start Small.
Thinking efficiently during the initial phases can save you lots of money which is ultimately free profit. From living expenses to leisure expenses, every penny is critical to get you moving in the right direction. Don’t have any unneeded business space; if your business is manageable in a small den or home office, you might be better off doing so till you are able to expand comfortably.
There isn’t guaranteed success in starting a business, some are inevitably not going to work- which could be due to factors out of your control (ie. Economy, Local Market etc.) Keeping this in mind, in you find yourself in one of these worst case scenarios, the recovery will only be on a small scale; saving you from much larger burdens/debts.
Create a financial backing plan
Way too often people go into business with zero savings. They depend on loans from friends, family, and banks. They expect to start paying the loans back immediately with their initial profits. It is rare for businesses to obtain such profit margins so quick; it can take months or even years to turn a decent profit. These loans are essentially a liability and risk, often you’ll find yourself resorting to take out home equity loans or use credit cards to get by; putting your credit rating at risk.
It is much more beneficial to plan out a way to put aside money for your investments, to get you through the initial start up phase. As earlier stated, odds are your business will not be profitable for months or even years. This investment money will help keep things smooth with no risks involved.
Will you make a profit? – How? Figure it out
You may have a vision of success but are you able to state how exactly you will be turning a profit? You need to figure out your costs and expenses; rent, inventory, employees and the remaining items on a shockingly long list of costs. Only after figuring out these key factors, you’ll be able to have a adequate briefing on your profit potential.
Plan, plan, plan and plan!
Making a business plan is almost vital if you wish to succeed. It doesn’t have to be extremely detailed but knowing your path and having it mapped out in front of you will make the process to come much smoother. The key items to take keep track of are: a profit-and-loss forecast, break-even analysis and a cash flow projection. Keeping track of all these are simple feats that can be done with spreadsheets and simple number input, knowing this information gives a very helpful hand as it will set you off in the right direction instead of realizing it later on.
Another reason that the planning stage is important ties into point number 1, you’ll get a rough idea of what your start-up costs are and how much money will need to be saved. Making the numbers work on paper is very important before taking your idea firsthand into the real world.
Pay bills and taxes on time, be safe
Paying bills and taxes on time will ensure keeping your credit profile positive and intact. This adds to a company’s reputation, which is very important when searching for customers. It is definitely in your best interest to keep on track of this to avoid any additional, avoidable late payment charges. Also when dealing with distributors, paying on time will lead to building a ber relationship which could ultimately benefit your company in the long run.
Use Contracts and Agreements
Many laws actually require you to put some contracts and agreements in writing if they: last longer than a year, involve the sale of goods or services worth $500 or more, transfer ownership of copyrights or real estate.
It’s always a wise choice to put almost everything in writing, even if it isn’t legally required. Oral agreements aren’t the most reliable as they are impossible to prove. You’ll want to keep all your rental, storage, contracting, service, purchase order and sales agreements worth more than a couple hundred dollars in writing form for record purposes and avoiding a liability. Get in the habit of issuing receipts for all transactions and deals- regardless of price.
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