Entrepreneurs that hope to start their own business often fail to accurately foresee the amount of time and money it takes to be successful. According to the bureau of labor statistics, about 1 of every 3 businesses in the U.S. fails within the first two years of opening. If you’re looking to start your own business, be ready to commit the time, stay flexible, and plan your finances accordingly. With the odds against you, proper planning and business strategy are essential to overcoming obstacles and achieving success. Make an organized outline of everything required to start and run your business for 6 months to a year without profit. Be realistic with your planning so that your calculations are as accurate as possible. To get on the fast track to starting your dream business, follow these 5 steps and be ready to tackle the challenges of entrepreneurship.
1. Research and Network
Before delving into a specific plan, look into examples of other small businesses in the same area and industry that you want to start your business in. Contact local small business owners, entrepreneurs, and government officials to get a full picture of what is required and how to avoid hidden expenses. Look up related books and magazine articles at your nearest library or search the internet for an abundance of information on the type of business you want to start. It is also a good idea to attend trade shows and network with people. Other business owners are usually happy to share lessons from their experiences in the industry you would like to go into.
2. Add Initial Expenses
After you have done your research and built some connections in the industry, start calculating how much this business venture is going to cost (here is a good startup costs calculator). First, add up the one-time expenses that are required for the initial startup. These can vary from one business to the next but usually includes the following:
- Down payment and security deposit
- Remodeling and maintenance
- Licenses and permits
- Marketing materials (signs, brochures, ads, etc.)
- Incorporating (becoming an LLC or other corporate entity)
- Initial inventory
3. Add Ongoing Expenses
The next step is to identify and add up the continuous costs of running your business. These are the expenses you will consistently have to pay in order to legally make your business successful. Notice that some initial expenses can also become ongoing but less costly expenses.
- Rent or mortgage
- Employee payroll and owner’s draw
- Restocking inventory
- Advertising and marketing
- Debt repayment (if you took out loans)
- Accountant and lawyer fees
4. Establish Startup Time
Even with all your expenses figured out, get the licensing and government permits to start your business can be a slow and difficult process. Know the legal system and local government requirements before moving forward with any spending or investing. It is essential that entrepreneurs looking to start their own business understand the legal framework of the industry they are about to enter. Apply for permits and licensing in advance so your startup is not slowed down or hurt by impatient investors.
5. Stay Flexible
At the end of all the planning, be ready to be left with a much different business model than what you originally envisioned. Staying flexible and innovative is key to the success of any entrepreneur. Don’t expect that starting your business will be easy and straightforward. Be resilient to failure but adaptable to change; and remember to always learn from your mistakes.
If you’ve done the proper planning and are ready to start you own business but need extra funding, Factor Finders can help. We set up businesses of all sizes with factoring companies that purchase invoices at a discount and provide immediate cash in return. Instead of letting delaying the startup time or letting your business struggle, factor invoices and enjoy a steady flow of working capital. Contact us to request a free quote today!