By: Jennifer Hice
on Sunday, September 25, 2011
For budding entrepreneurs, the importance of arming oneself with knowledge by way of a business plan can be the difference between creating a successful startup and dousing the flame of what could have been a bright idea. What would happen if you were selected to lead a corporate meeting and you walked into the conference room completely unprepared; no notes, no budget numbers and no talking points? Unless, by some miracle, your ability to “wing-it” is actually successful, your odds of running a productive meeting are quite slim. Think about it…would you ever begin a sales pitch, hoping to close a new client, without first researching their business background? After finishing law school, would you take the bar exam without ever cracking a book to study? Would you walk into a job interview without a complete and updated resume? Unless you are the luckiest person on the planet, I certainly hope your answer to all of these questions is a resounding "no;" you would never set yourself up for failure! Instead, you would devise a plan. You would practice due diligence. You would do everything in your power to prepare for the best possible outcome. That same need for proper preparation rings true for every aspiring business owner. So, what exactly can hopeful and motivated entrepreneurs do to ensure their bright ideas have the makings for successful startup companies
Well, creating a business plan, identifying opportunities, having an understanding of projected income and expenses and preparing for the inevitable bumps in the road, will all go a long way when planning for a successful startup business!
In fact, one of the first things prospective owners should do when in the preliminary stages of launching a business is to estimate their startup costs. While common sense will go a long way in getting your business off the ground, it is still vitally important for business owners and budding entrepreneurs to have a keen understanding of their own personal and company financials. Given today’s electronic and technologically advanced business environment, the prolific use of debit cards and credit cards can make spending seem mindless. It is extremely easy for new business owners to become completely disconnected from their money trail, resulting in an extremely inadequate understanding of their own income and expenses. Unless you conduct routine audits on your spending habits, you have no way of really knowing where your money is going and if any changes need to be made in order to increase cost savings or simply streamline your bottom-line budget all together. Paying with hard cash or with a check is not always convenient, but it’s a great way to help you stay on budget, make better spending choices and have a more realistic understanding of your own expenses.
For a startup small business
, it is incredibly important for owners to think through their business model, creating a list of assets and providing a breakdown of expenses and projected income. It is also important to note that there will be a significant difference in the estimated financials for service-based startup companies versus those for product-based startup companies. Reason being, a service-based business will initially require far less capital than a product-based business. Therefore, if the owner of a service-based business underestimates his or her startup costs, the discrepancy may not completely impede the launch of the business. Conversely, should the startup costs for a product-based company be grossly underestimated, the business could fold before it’s ever started. Regardless, any new business owner must walk a fine line when developing a solid business plan. While the planning stage is extremely important, bogging yourself down in too much of the nitty-gritty could prevent the launch of your new business all together.
Identifying and utilizing every resource at your disposal can mean the difference between success and failure. Your ability to make educated estimates of income and expenses, accounting for the known and anticipating the unknown, can carry your new business through the months it will spend “in the red.” The continuous revision management of your business plan will be the reason your company will eventually succeed and remain “in the black.” Any new business venture inherently carries with it a great amount of risk. But, with great risk, comes great reward. With the proper planning and the proper protections in place, the better the odds that you can weather the storm of a starting a new business
and experience amazing success!