"Starting Up a Business - Before You Leap"

by Michael Giles

Published on this site: October 15th, 2005 - See more articles from this month

Are you one of millions of Americans that is dreaming of taking the leap into entrepreneurship? Perhaps you're tired of making money for someone else, or maybe you've identified an underserved market that needs to be exploited.

If this is you, take heed to some important things that you must know before you leap. While entrepreneurs are considered to be risk- takers, successful entrepreneurs are actually good at minimizing risk by properly planning before and after they leap.

Here are some helpful steps for you future Entrepreneurs:

1. Plan, plan, and plan some more! Business plans are not for nerds, they are an absolute necessity. After you have completed your business plan, I guarantee that you will have learned a lot more about what you're about to be getting into. You can find lots of great resources to create your business plan on the Internet, at book stores, your local library, or better yet, an experienced consultant.
   
   
2. Know how much capital you will need to reach break-even and profitability. Don't set yourself up for failure by being under- capitalized! This is the number one killer of small businesses. Your new business will cost much more than expected to get beyond start-up. If you're lucky and with some hard work, you may come close to hitting your revenue projections the first year.
   
   
3. Get the money up front. After you have done a very thorough cash- flow forecast to determine what your maximum indebtedness will be without any initial funding, pad that number by twenty five percent and this will be how much money you will need to start your business. Make sure that you get all of this money up front from your lender or investor so when the lean times come around (and they will), you won't have to go back to the well and risk not getting more capital when you need it most. Desperation will only put you in a worse position.
   
   
4. Have a support group. You are about to be putting in some long hours, so having your family's support will help you see things through to success. Find a successful business owner and ask if they can be available as a mentor. Believe me, most successful entrepreneurs will appreciate this.
   
   
5. Have your finances in order. Entrepreneurs make the sacrifice on the front end for greater rewards in the future. This means that you must be disciplined to live on less than you make. Pay off your debts before you start, and have your emergency fund established to get you through six to twelve months to survive without any income. If this isn't possible, get a second job and sell things you can live without. I cannot under-emphasize how important this is.

This is just a sample of the necessary ingredients of planning to start up a business. After you have done your planning and are ready to make a go of it, probably the most important thing that I can suggest is to execute your plan! So many businesses never see the light of day because of fear of failure. Make a conscious decision to be driven by courage rather than fear and you will be amazed at what can happen. Plan before you leap and then leap as far as you can!



Michael Giles is an Entrepreneur Consultant for start-up and growing companies. He has an MBA in Entrepreneurship and consults for many industries. Visit his site to learn more: http://www.entrepreneursolutions.net or mailto:[email protected]