Today it is as easy to get a business started, as it is buying a Coke at the 7-11. There are so many opportunities out there; it can drive you crazy and so many look good.
Want to know the interesting part though; it is not the businesses that fail.
There are vital parts to starting a business that are most often over-looked because people are so excited to just begin “making money” with the visions they got from the brochure or the website and maybe some testimonials where they heard about the millions they are going to make. However, it is the “business plan”, not just their enthusiasm that will make them successful.
So again, it is the lack of a business plan, to lead them to success that will make them fail, but not only that, there is much more.
Interestingly though, within a typical business plan, there is a single component left out that is the number one contributor to failure in business today and it is so simple, you will likely shake your head and go: “man, how did I miss that?”
So, what is the number one reason any business plan will actually be a plan to fail?
Yep, that’s right; they run out of money, before they become profitable. Also, they only become profitable if they picked the right business in a growing market that will ultimately provide enough money to attain their goals.
So how do you properly plan to capitalize your business up front and make the money you need to attain all your goals? Here are four principles that will assist you:
The First Principle is to pick a business that will financially fulfil your desires:
Well, first of all, I am going to back up a bit; even before you decide what business you are going to do, you want to establish your goals (3, 6, 12, 24, 60 month goals) you want to establish what you want to achieve from being in business, otherwise you will not have anything to plan towards. Then go out and find a business that will be able to provide that kind of goal attainment.
Now that you know what to measure your business against, if it does not measure up to your goals, then find another business to do. Warning: if you decide to shrink your goals to meet the max amount of money it can make, you will be unfulfilled in what you will be doing and failure will be a result.
Now that you know what you want and have the business that can produce the results you want to attain your goals, you understand the first principle; pick a business that will financially fulfil your desires.
If you do your business plan, then set your goals, you will likely sell yourself short and will end up either being frustrated a very short time after getting started, or you will not be motivated enough to work the business with all your heart and guess what, you will fail.
The Second Principle is to understand all your costs:
Get a clear understanding of ALL the start-up costs, your monthly expenses (including your living expenses, advertising, long distance, domain names, heat, rent, hydro, insurance, etc.) and be sure to include the costs of all the products you are going to be representing because you can only transfer enthusiasm when you talk about something you have experienced yourself. After all, sales are what make businesses money and the last four letters of enthusiasm stand for “I Am Sold Myself”. This will make a clear distinction between you and a competitor that does not have genuine enthusiasm for his product will make all the difference in your success.
Now that you have all your start-up and ongoing costs figured out, make sure you have enough to run your business 100% for at least six months, or for as much as a year.
Understand, no business worth its weight is going to be an overnight success. While there are some, (if that is what you are looking for, go buy a lotto ticket) it is certainly not the norm. For the rest of you, plan for success by having enough money in the bank for 6 months, to a year of operating and living costs. When you do this you will ensure your success because money is removed as concern.
You will likely need to finance the start-up of your business, most people do and the likely newcomer to business does not have an extra six figures sitting in the bank burning a hole in their pocket. Many people are barely getting by and want to start a business because they recognize that they will not make it, by making it for someone else.
So where do you get the money to get going. Well, I like to use “other people’s money” to bring me forward in life; it does not risk my money up front and the costs of borrowing are a business expense.
Here are some ideas: Do a second mortgage on your house, or a home equity loan, or take out a line of credit, or get a co-signer, or borrow on your assets, or use credit cards with low, or no interest, for six months. Whatever it takes to make this happen, make it happen, it will be the best piece of mind you will have if you know all your costs are covered for six months to a year.
Again, being Under Capitalized is the number one reason for failure in business, if you do not have access to capital for everything, your mind will get fixated on finding money, or making money in your business too soon in the business building process and you will shrivel up and die on the vine.
The Third Priciple it to execute your plan.
The only way you should ever approach life, or business, is to Persist Without Exception. Andy Andrews, author of “The Travellers Gift” does a great job of explaining the “without exception” part. This will allow you to find a way when there is no way.
Play to win, versus playing not to lose.
The Fourth Principle is to keep your hours and responsibilities down
If you are wanting to be smart; spend the least amount of time possible working your business (20 – 25 hours per week max) and the most amount of time living your life; start a business that you can do from home (this is the kind that is the most profitable too) you can keep your start-up costs down and be very lean and mean.
Getting into a “Traditional Business” with typical overhead like an office lease, employees, accountants and so on and guess what, you just bought yourself a job as a professional babysitter.
I really challenge you to dispel any thought that you need to do a “Traditional Business” in order to make great money because I have done it and 70 – 80 hour work weeks really bite.
Regardless of what you choose to do, be sure to have a business that can accomplish your goals, one that you get to understand everything and all the costs before you get in too deep, one that will only take 20-25 hours per week to manage and run and most of all, be sure to be properly capitalized and you have a great chance of being successful beyond your expectations.
To your business success,
Copyright 2006 – Nicholls Enterprises