Suggestions to help get your business off to a smooth start.
Many of you want to start your own business and dream of making big bucks. In todays world this will remain a dream if you do not start right. Many go and ask a friends advice, others speak to the bank, others surf the net for info.
Well here is yet another page of info to think about. Here are some points to think apon.
1) My money, banks money
For this I would say, save as much money as posible before starting. Some go to friends or the bank to loan money to start their business. The thing is that you are not able to pay back the loan right away. Making money takes time and the lender is not always willing to wait so long before getting the money back. Most businesses are not able to show profit for at least one to two years. Even if business is booming, who will say your cutomers will pay you on time.
2) Start small
Think small. Don’t rent premises if you can work somewhere else, and don’t hire employees until you can keep them busy. Convert a room in the house into an office, use the garage or scavange a corner in the house that you can use. So if you any rookie mistakes, these will be on a small scale and not bury you in debt. This in turn allows you to recover from them more easily and to continue with your dream.
3) Your personal assests - protect them
When you go into business for yourself, you are usually personally liable for all judgments and debts that the business incurs. This includes business loans, taxes, money owed to suppliers and landlords, and any judgments against the business as a result of a lawsuit. If you don’t protect yourself, a creditor can go after your personal assets, such as your car and your house, to pay for these debts.
4) Get a business plan, even if it is short.
The first step in creating a business plan is to understand your profit numbers and creating a break-even analysis. For most small companies, the key portions of a business plan are the break-even analysis, a profit-and-loss forecast, and a cash flow projection. (Being able to project your cash flow is of key importance and will make or break your business) Even if your business is getting plenty of work or selling its products, if you’re not getting paid for 90-180 days, you’re not going to survive unless you’ve planned for it. A good plan is to have a cash flow spreadsheet in place, as well as a profit-and-loss forecast. This will allow you to adjust your business idea and improve it as you go along.
Tags: loan money, personal assests, Start small, start your own business
September 3rd, 2008 at 9:13 am
What is the difference between acash flow spreadsheet and a profit-and-loss forecast?
September 3rd, 2008 at 2:41 pm
A cashflow worksheet : The cash flow worksheet is a file that provides a systematic method of recording estimates of cash receipts and expenditures, which can be compared with actual receipts and expenditures as they become known.
Profit and loss forcast : The profit and loss forecast is not intended to be a detailed financial statement. It acts as a guide to help you forecast your company’s sales and expenses.
Thus the P&L is a future guide plan which you then transfer to a cash flow worksheet . This cash flow worksheet is a live document which gets updated with actual income and expense figures. The work sheet compares that what was forecast to the actual and thus will show if you are staying with the forcast plan, doing better or doing worse. If doing worse, you can then adjust your forcasts as so to prevent your business from going under.
September 4th, 2008 at 3:26 pm
Do you have an example of a cash flow forecast i can use?