Congratulations! You have decided to take the next step in your career and start your own business.
Fantastic. But are you ready?
Now, before you answer this, I want to define what I mean by ready. Here it is:
You have a plan, but not just any plan. Rather, a business plan complete with: financial projections & realistic expectations; various what if scenarios; a marketing plan with accurate costing and expected outcomes; a financial structure in place to support your initial operations; and desire.
Along with of course, the most important item: that particular product or service which your business will be developed around.
In my experience, most people have a product or service that they can turn in to a business, and for the most part, at least initially, there definitely is a desire to work for oneself.
Both product & desire are critical to your success in your new venture, but what is just as critical in my opinion is the work that you have done to plan and prepare for the various stages of your new business.
For example, most people have heard that you should plan on not being able to draw a wage for the first 3 months of operation. Have you budgeted for this? But what if you cannot take a wage for 6 months – how will this affect you?
Planning is critical to your new business, and not just writing out your strengths and weaknesses (although important) but breaking out a picture of how your business will look on day one, week 12, after 6 months and then a year etc.
If you say that you will hit $300,000 in sales in your first year, when during the year will these occur? I would bet that it will not be 12 months of $25,000 each. In fact it may be $0 for the first 2 months before slowly starting to pick up. Have you planned for this? Is your $300,000 even realistic or just a number that you had in mind?
Dont misunderstand me, targets are good, but better to have a realistic objective and plan your business model around accurate assumptions and achievable outcomes.
What about stress testing your business plan? What is the impact of lower sales and higher costs on your financial model?
Here are a few other thoughts for you to consider:
- How much money will you have to make each day?
- Does this value include a reasonable wage for you?
- Have you budgeted a profit component?
The reason I hi-lite these 3 points is that as a business you need to know how much money you need to generate each day to not only pay your bills, but to pay yourself, and to generate a profit.
You are in business to make money – therefore you need to plan for your business to make money from the beginning. Do not be the type of business owner who is content with just getting by and convinces themselves that there is always tomorrow.
Tomorrow is already here and the next day too, before you know it another month will pass. Plan for success today by understanding what it will take to be profitable each and every day.
When you start out your sales will be lower, your initial costs will be higher and your salary might not be as high as you wished for. But if you plan for this, you will have a better chance of success vs. overly optimistic assumptions that look good, but are not useful in any way.
Your idea and the opportunity may be great, ensure that you are prepared to move forward and succeed.
*The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.