Financing your Business
Many small businesses
fail due to lack of financial planning and control….
Getting your financing right upfront can be really tough, as
you probably only have a vague of how much you actually need. Your research is
crucial. Start by writing down what you have, what you think you will need to
get started, as well as what you need to stay in business until such time as
you actually start getting paid.
Now beak these elements down. Under “what you have” include
a personal financial statement to provide a visual guide of what you own and
what you owe. This is your personal assets and liabilities statement.
When looking at your start-up costs, your research should
include phoning around and getting “ballpark” figures for all inputs. And if
you’re in retail, don’t forget to include things like renovating or decorating
your premises, as well as furniture and equipment. Legal fees, registration and
licensing fees are also often forgotten about. These can mount up, so find out
what you are in for. Provide a “contingency” amount to cover the unexpected
costs that always crop up.
Even if you believe the tills will be ringing from the
moment you open the doors, don’t include these funds in your operating
expenses. The reality is that you will need at least three months’ worth of
expenses (plus your start-up costs) available in order to operate comfortably from
the start. I’d recommend that you put these funds into savings or
interest-bearing account of sorts.
How much additional
finance will you need?
Add the start-up finance required, to three-times your
expected monthly expenses, and deduct the figures on your personal financial
statement, to determine what additional finance (if any) you will require. Don’t
forget to include your living expenses; it’s one thing being able to pay for
all your business expenses, but if you can’t cover your rent, you have a
problem. From here, work out your operating costs for your first year of
operation.
Draw up a business
plan from start
Don’t fall into trap of thinking that you only need a
business plan if you are applying for finance from a bank or alternative
funder. Draw one up from the start –on your own –as it will give you greater
control over your business. If you follow this plan and update it on regular
basis, it should keep you in the right track.
Remember that the better the plan, the better your chances
of success. (For comprehensive business plan template, courtesy of Viljoen
Consulting, email editor@bizmag.co.za
to request one)
There is no doubt that starting a business is hard work and
that the process can be daunting. But it is also incredibly rewarding. If you
are adequately prepared, have a comprehensive business plan in place, and
remain focused on your goals, you have every chance of success. That said there
will always be things you haven’t anticipated, and owning a business means that
you will be constantly learning. Continue to research your product or service
and market. Keep reading up n new legislation and business ideas. Most of all
do as much of it as you can, but don’t be scared to ask for help. Good luck!
(This
article was taken from Your Business Magazine February/March 2012 issue, page
24) www.bizmag.co.za
Nikki Viljoen is an
internal auditor and business administration specialist. Contact 083 702 8849 or
www.viljoenconsulting.co.za
No comments:
Post a Comment