For many people, the dream of owning their own business seems impossible. For some, it’s a financial matter. Some may find the planning stages too daunting. And, some simply have no idea where to begin. There are a million excuses for not starting a business, some of which are valid, but in truth the right tools, resources and assistance can turn a dream of owning a business into a reality.
Many factors contribute to business failure, the top three include inadequate planning, not having enough money, and insufficient financial records. Of course, unforeseen circumstances can also arise which can add to business failure. But, on the other hand, proper planning, utilizing healthy resources and a diligent work ethic can lead to successful business practices.
- Planning and research are essential to the future success of any business. When considering starting a new business, it is important to start with a feasibility study. A feasibility study includes two lists, a start-up budget and a monthly expense list. The start-up budget should include all of the expenses needed to open the doors, such as: business licensing, business insurance, rent deposits, furniture, equipment, supplies, operating capital, etc. The next step is developing the monthly expense budget. This list should include all expenses that will be incurred on an ongoing regular basis to keep the business running smoothly, such as: salaries, rent, loan payments, utilities, professional fees, etc. The monthly budget will provide an idea of how much monthly revenue will be necessary to break even. The feasibility study tells the story of whether or not the business concept is strong enough to be profitable. A contingency plan will be helpful in dealing with unforeseen circumstances and may prevent business failure.
- Access to capital is one of the biggest challenges to starting or growing a business. As a result of the downturn in the economy, banks are not lending money as freely, especially to start-ups. To be considered for a business loan, the applicant will have to provide three key components: a well written business plan, good credit and in some cases, a minimum of 15% down payment towards the loan amount. The Small Business Development Center (SBDC) can offer assistance with business plans as well as information on a variety of business loans available.
- The success of a business is directly related to keeping good quality, current financial records. It is vitally important that a business owner understands how to set-up and maintain financial records. Sometimes this requires hiring a professional bookkeeper, accountant or CPA. Although hiring a professional can be costly, it is well worth the investment in the long run. Software tools, such as QuickBooks, can simplify small business accounting. However, to maximize the efficiency of accounting software, it is essential that the software be set-up correctly. The SBDC offers workshops on basic bookkeeping and QuickBooks.
Combining the tools mentioned above with healthy fortitude can be a recipe for success. And, understanding the risks of business ownership, as well as having a plan in place to handle challenges is important to planning tools. Being a business owner takes hard work and determination, but the benefits can far outweigh those of working for someone else.