How to Start a Business in 10 Easy Steps: Step Five

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Now that you have a business plan, you know the legal structure of your business, and you have a good understanding of your demographics, you are ready to assess your finances and what your limitations are. It is very important to know where you stand financially and what exactly your business requires in terms of money. Is your business something that you can start out of your home? Or, does your business require a larger financial investment, like a manufacturing company? I must admit that I have never been a big numbers person and personally hate dealing with finances. So, for me, this step was difficult.

Realistically evaluating your finances is a difficult step for most people, it can also be kind of depressing (depending on how large or small your bank account is). Unless, of course, you are Bill Gates, in which case you can pay someone to do this step for you. Some people will want to skip this step simply because it can be difficult to be honest with yourself about where you are at financially. No matter how difficult that may be, it is absolutely essential that you determine what you can afford for you business and what you can’t. This can help prevent you from taking on too big of a loan or investing too much too soon.

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Figure out what your business NEEDS (notice, needs and wants are very different) to get started. Don’t go out and buy yourself a brand new van when you could buy a used one off Craigslist, don’t go rent a shiny new office downtown when you could work out of your home. You want to try to start your business with as little investment as possible, that way if you do fail (that’s a big IF), you haven’t just lost every penny you ever saved on some $40,000 van that you can now only sell for $30,000.

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Remember, finances don’t just include how much money you have and how much you need. This also includes your time. You need to assess how much time you are realistically able to spend on your business. After all, time is money. How much is your time worth? Don’t sell yourself short, you deserve to paid what you want to be paid. So, make sure you set up your products/services in a way that pays you no less than what you value your time at. If you want to be paid at least $25/hour, don’t go clean people’s houses with your own van and cleaning supplies for $15/hour. Factor in cost of production, materials, time getting to and from different locations, and time spent on administrative tasks. Even if you charge $25/hour, but are still using all your own equipment, you aren’t getting paid $25/hour. Take your minimum pay + all expenses and that is what you should charge, whether it be by the hour or by the service.

Remember, always pay yourself first. My fiance always says, “Find a way to make your money work for you.”

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How to Start a Business in 10 Easy Steps: Step Four

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Now that you have established your legal status of your business, you are ready to start write your business plan. You have done all the research, know your demographic, and know exactly what products/services you are going to offer. At this point you were probably hoping that I wasn’t going to bring up writing a business plan. Seriously, who wants to spend that much time writing out a plan when things are going to change? According to a survey of Business Plan Pro software users, people who had completed business plans were nearly twice as likely to successfully grow their businesses or obtain capital than those who did not craft a business plan.

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Entrepreneurs nowadays go back and forth about whether it is essential to write a business plan and if it really increases your chances of success. Each individual needs to assess their specific needs and make sure that writing a plan is what they really want to do. An advantage to writing a thorough business plan is that you have laid out the groundwork for where you want to your business to go. Remember, a business plan is a living document and is meant to be changed.

Your business plan should include the following parts;

-Executive Summary

-Company Description

-Market Analysis

-Organization & Management

-Service or Product Line

-Marketing & Sales

-Funding Request

-Financial Projections

-Appendix

This may look like a daunting list, but it really is not. Your business plan can be as detailed or as open ended as you want it to be. Need more help writing a plan? Contact BiGAUSTIN and make a FREE appointment with one of our business consultants to learn how you can make a business plan work for you.