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I Have a Business Idea. What Now?

I Have a Business Idea. What Now?

Cheryl Isaac |

3. Finances

When my husband decided to start his own business, I was still working in the banking industry. He’s an attorney who hates to plan. With my financial planning and business banking background, on the other hand, I wanted to plan ahead.

I remember taking a piece of paper and jotting down all of our expenses vs. income. I asked how he proposed to supplement his income. He was quiet for a minute. Then he said, “Well, with the sales coming in . . .” I interrupted him: “Well, yeah, but you can’t count on that, at least not for the first six months. So during this time, how do you suggest we pay the bills?”

He suggested the credit cards we had started to accumulate just for this venture. I quickly jotted down some figures based on potential credit card scenarios: If this balance is charged on the card using this interest rate and these finance charges, this payment will have to be made. Then I asked him how he planned to pay the credit cards after we charged them, plus pay business and personal expenses.

He had no answer just then, but it got him thinking. We finally came up with a budget strategy that involved saving some money and borrowing some money to ensure that we paid our bills on time.

If you’re thinking about starting a business, you need to seriously consider your personal and business finances before you make this leap:

  • Start formulating a budget strategy based on an analysis of your current spending habits and income.
  • Think about what you or your family would need to save for six months to one year to pay your bills.
  • Analyze your personal expenses vs. any business-overhead expenses.
  • Start the mental preparation for not receiving a paycheck for a year or two.

4. Professional Expertise

Start aligning yourself with professional expertise during the planning stages. You might need initial advice from an attorney, an accountant, an insurance broker, a business consultant, a marketing or sales expert and a business banker. Here are a couple of tips for reeling in these individuals throughout your planning process:

  • Call and try to get 20- to 30-minute phone consultations. This gives the experts a chance to learn about your business and maybe give you some free tips. It could also be the first step to building a relationship for the future.
  • Start attending seminars or workshops hosted by these individuals. This will help you gather valuable information that could prove useful in the long run.
  • Skip the drive-through window at your bank. Go inside and start talking to your bank representatives—even if it’s only about your personal accounts. Building these relationships may prove advantageous when the dialogue about your business plans comes into play.

Once you’ve gone through these pre-planning stages, the next step would be to start the registration process and write your business plan. If that sounds too difficult, hire professionals to aid you in this task. Whatever you do, remember: If you are willing to take the risk, take a calculated risk.

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