Whether starting off flush or with next to nothing, close attention to finances will provide your business with more stability and longevity. This guide provides an overview of the challenges and some tips to overcome them.
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Excerpt from guide:
From Financial Statements to Financing
Tips to Avoid Common Mistakes & Bootstrapping For Tough Times
By Helen Hirsh Spence and Debra Yearwood
Whether starting off flush or with next to nothing, close attention to finances will provide your business with more stability and longevity.
When creating the business, be as realistic as possible. With as much detail as practical, map out expected cash inflows and outflows. If feasible look at the year ahead to estimate the first six months. This will allow you to arrange for sufficient financing.
Unfortunately, the primary reason so many small businesses fail is often financial. Reduce risk by minimizing the top six avoidable mistakes.
Top Six Avoidable Mistakes
New small business owners are similar to new parents. They both suddenly have so much to juggle and to learn about the wellbeing of their business or baby, they tend to lose sight of the cumulative impact of their costs. Unanticipated costs can catch them short of funds.
Too many small businesses start without enough money to cover the costs of legal fees, insurance or utilities. They also don’t consider the lag time between cash coming in and the time when bills and salaries have to be paid. Be clear on how much cash is enough cash.
Once it is determined how much is needed, if there isn’t enough to cover your costs, consider the following options:
Borrowing from family or friends.
Be conscious of the added stress borrowing from friends and family brings.
Getting a small business loan from a bank.
Receiving additional cash from a new partner.
With partners comes shared decision making. Make sure you have an agreement in place.
Investment from external sources.
Government grants and loans.
Using bootstrapping techniques as described below.