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First Steps In Starting A Business
By L. Edward
More Business Skills
Articles
Published on this site: December 22nd, 2008 - See
more articles from this month
Starting a business takes a realistic assessment of expenses,
planning assets, and most importantly, funding requirements. The
second leading cause of small business failure is from under
capitalization. (The leading cause is mismanaged growth).
Capitalizing your new business means overcoming the high up
front startup costs, and making sure that you have enough money
in reserve to handle operating expenses for a few months while
building your client base or bringing your service or product to
the market. Nothing is as disheartening as seeing that your
business has failed when it could have succeeded with a bit more
money at the right time.
To figure out your capitalization requirements, you're going to
need to itemize your start-up costs, like paying for office and
work space, warehouse space if you need it, and initial capital
investments in equipment, tools and furnishings, plus service
fees (attorney time, licensing fees and state permits). You'll
also need to start the basic utilities – internet, telephone,
trash pickup, electricity and water. When you start adding it
all up, it can become more than a little daunting.
However, you don't need to do it all at once. Make a priority
list. Can you work out of a spare room in your home, or use your
garage as your small warehouse? If the type of business lets you
do this, then you can postpone a large chunk of continuing
overhead expenses by doing exactly that. If you're providing an
online service business (marketing assistance, freelance
writing, and the like), you may never need to get "real" office
space, though there are some serious benefits to doing so. (Not
being interrupted by your family during business hours is the
least of them!)
Another way to overcome a shortage of capital is sweat equity.
When you're starting a business, the most plentiful commodity
you have is your back and sweat, and doing things for yourself.
It's easy to get into a rut with this, so be sure that you're
valuing your time appropriately – remember that the leading
cause of business failure is mismanaged growth: Getting into the
habit of doing everything yourself, when hiring an employee to
free you up to do business management is one of the classic
failure patterns. Doing things yourself will give you a gut
appreciation of where the money goes, and what jobs you'll want
to delegate in the future. It'll also give you a leg up, when
you have employees, to know what all the jobs are, and how to
train people to do them to your satisfaction.
Keep an open mind during the business planning phase. Network
and talk to other small business owners, and make a habit of
going to your local SBDC luncheons every month. Learn from the
people who are going through what you went through, or have gone
through it before. There will be lots of suggestions on how to
manage your business' growth.
Finally, be aware of the differences between capital
expenditures, sunk costs and recurrent expenses. Or, when it's
time to spend money, don't be afraid to do it when the
opportunity strikes!
L. Edward: Helps people to start, get grant
money, build, market home business online at www.HomeBusinessIT.com.
Learn the secrets to awesome
success and wealth from the greatest minds in the field of
personal achievement..L. Edward recommends you visit www.SuccessUniversityIT.com.
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