Miscellaneous
Find the Right Biz for You Series (Part 9) Welcome to Episode 10 of the Small Biz 101 Podcast – The 9th episode of the Find the Right Biz for You Series! We’ve covered quite a bit in previous episodes: Self-assessment Generating Biz ideas Business Styles Business Cautions Research - Is you idea a viable one? Today, we’ll get into the numbers. The finances: What you anticipate the costs will be to start the business? What the ongoing costs will be? Determining your cash flow and – the highlight – what is your breakeven point? When will your business turn the corner into profitability. Start-up costs Even at this early stage, it’s a good idea to at least have a sense of these numbers. They will reveal many critical things to you: How much you will need to begin to open the doors. Whether you afford the business on your own. Whether you need to put off starting the business for a bit while you save money. Should you use other sources of financing? When we think of start-up costs, we often think of these only having to do with the beginning of a business. I suggest that, if you have a business, it’s still relatively new, and you plan on making major changes once you’ve gotten it up and running, consider these new phases of the business to be start up costs as well. Property Down payment, if purchasing space Rent, if renting space + security deposit Build-out Costs Equipment Facility equipment Office furniture Technology equipment Initial supplies Decorating Signage Lighting Starting inventory Licenses, permits, certification costs Professional fees: Accountant Attorney – his/her own fees + incorporation fees Business Coach Graphic Designer Website designer Person who comes to your location to set up your computers and phones Professional Development: Education/Certifications Memberships Professional library Online Technology Expenses: Domain name Webhosting Online Scheduler Online payment processing Opening/Launch Activities: Advertising and other marketing costs Brochures, flyers Business cards Add on 15%. Rarely do actual costs come in below estimates. Give yourself a cushion. Cash Flow and Break even Analysis Estimate of the gross income you anticipate generating on a monthly basis Estimate your ongoing monthly expenses: Rent/mortgage Insurance Utilities Online charges Loan payments Marketing and advertising fees Employee salaries Your salary Ongoing independent contractor fees Inventory costs Taxes Maintenance + 15% Plot these estimates out in a spread sheet deducting the monthly expenses from the monthly gross income to calculate your anticipated net profit or loss. Once at the profit level, begin reimbursing your start-up costs, a chunk at a time. When you reach the point where your income consistently covers your expenses and the start-up costs have been reimbursed, this is your Breakeven Point. Celebrate!!! The cash flow and breakeven analysis will also provide you with valuable information: How much money will you need to set aside to support the business until it reaches a profit point? Do you need to adjust factors around the source of your income (even changing your business model, possibly) to take your business into the black in a time frame that works for you? Can you cut expense estimates to meet your needs? Do you have enough money to start this business on your own or will you need to obtain funding from other sources? Coming up Getting creative with sources of financing: You Your family, friends, and associates Debt financing Equity financing Crowdsourcing Other valuable free or low-cost resources for starting up a small business. Free eBook: Passion to Prosperity: Finding Your Ideal Side Business If you would like more information about how to find your ideal small business, please help yourself to a free copy of my eBook: "Passion to Prosperity: Finding Your Ideal Side Business". Although it was written with side businesses in mind, the process for determining your own small business is very much the same. Also, go back and listen to previous episodes of this Series, if you haven't already. Ask Your Questions or Share Your Feedback In the comments section of these show notes. At the Scattered to Streamlined Business Coaching Facebook Page By email at smallbiz101podcast@gmail.com Connect with Me At my business website, Scattered to Streamlined Business Coaching Join the Scattered to Streamlined Business Coaching Facebook Page Connect with me on Twitter Subscribe, rate, and review in iTunes