subject: How To Make Sure That You New Business Works From Day One... [print this page] You're up an running, everyone is wishing you well, all your friends promise to buy from you every day, you have fired your boss, your doors are open and this is the brilliant start to the rest of your life...
You enthusiastically launch into your new business and approach it with energy and vigor for the next few weeks. Like every new business, you are gung ho, dealing with inquiries, orders, deliveries and ordering supplies.
Then suddenly your bank manager calls you to say that you are running out of money on the same day that your supplier calls you looking for cash. Yikes!
So where has all the money gone?
How to get your business working from day one really involves the implementation of a set of checks and balances from the outset to ensure that your business actually follows the plan that you poured over for the bank initially.
Here are a few guidelines that you need to follow:
1. Prepare a simple budget with all your projected outgoings included including payments for tax and employee related charges. Also include your projected payments to suppliers based on the credit terms that they gave you. Find out as much as you can about "the cash gap" and ensure that you have the funds to support yours.
2. Prepare a daily and weekly cashflow tracker for your business and either complete it daily yourself or delegate it to someone who will complete it for you. Either way, you must inspect it and understand each and every number on there.
3. Always have a set of key performance indicators for your business - list for your business which will track the level of activity that you are doing and how well you are doing it.
This is vitally important. i.e you may think you are busy doing 10 transactions per day at 100 dollars each but your earlier budget may has established that you need to do 1200 per day just to break even.
If you are not making the required number of transactions required to break even, then you must make positive changes in your business to ensure your success.
The most common mistake that people make when starting out in business is not watching the numbers and even more importantly not understanding the numbers.
Very often when the numbers are not being understood they are ignored which only serves to compound the issue and no one wants to receive the call from the bank manager.
Many small business fail because of burnout and the majority of this stems from a poor understanding of the basic fundamentals of business from the outset.
This alone can put people off and thats why many people choose to get into a business where the majority of this work is already done for you and you just have to follow a system. Many offline systems are franchises. Online line you also get similar options.
by: Derek O'Dwyer
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