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Although
owning your own business may be the "best thing I
ever did," it has its drawbacks,
especially in the early
days. This is the point at which it is so
easy to give it
all up because things are not moving
forward fast enough.
Many people have unrealistic ideas about
business ownership,
thinking that it's going to provide them
this six figure
income right from the first day, the truth
is that this very
rarely happens, especially for those who
buy into a
franchise or established retail business.
When they find out that they aren't
earning the income they
thought they would, they begin to worry
that they have made
a mistake in judgment and worry about
making ends meet. Pre-
planning solves a great deal of stress
that is involved when
building your business during its early
creation.
The reason many new business owners have
trouble making ends
meet is because they fail to plan properly
for the days that
are going to yield less income the saying
within the
industry is "If you fail to plan then you
plan to fail". On
average, it takes a new business anywhere
from three to five
years to turn a decent profit just to
break even will
probably take up to two years.
That is true even of a franchise since
those early days will
involve more income going to the franchise
corporation than
the franchise owner, so you have to make
sure that you plan
for that. How can you plan for those early
lean income days?
One thing you can do in the very beginning
is make sure that
you save more money before you invest in a
business so that
you have enough cash set aside toward your
living expenses
until you start earning a profit from your
business.
If you are leaving a position with another
company to start
your own business and are entitled to any
kind of severance
package such as unused vacation or sick
time, retirement
buyout, or other benefits, put those aside
in a special
account in case you need them to assist
with personal
expenses until your business is profitable
enough to operate
on its own if you like call it an
emergency fund but make
sure that you dont dip into it unless it
is absolutely
nessasary.
One option that some people do not even
know exists is that
of a loan for operating capital. This
means the business
owner can borrow money to see him through
until the business
becomes self-supporting. Even those who
know of this option
fail to utilize it properly by setting
their goals too high,
being over-confident about the time frame
for building the
business to a profitable level, and then
have to return to
the bank for more operating capital.
This should be included in your business
plan, and in order
to make sure that you have set realistic
goals, sit down
with a financial advisor or accountant in
order to assure
that your business plans includes
realistic goals for income
generation dont get carried away and think
everything will
be ok a good frank discusion with a
professional will help
you longterm.
Making sure you have all of the working
capital you need
before you open your business saves you
not only from hours
of worry but also save you the potential
of having to
prepare another business plan when you
require additional
funds.
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