3 Questions Every New Business Owner Must Answer

So, you've just made the decision to start up a business. Congratulations!

Now come the inevitable questions and doubts:

Do I have enough money to start up my business? Should I get a loan right now? Am I a good fit for my business?

These are the three powerful questions just about every new business owner asks. If you’re asking them right now, you don’t have to let them stop you from moving forward. Instead, address these challenges head-on by implementing the following crucial start-up solutions.

1.    Do I have enough money to start up my business?
As a small business coach, I see new business owners fail at dealing with this question more than any other. And with good reason. They just don't know how much it will cost to start up or how long it will be before their new business starts making money.

Problem: One of the reasons this is so difficult to calculate is because starting up a home-based business will have different start-up requirements than opening, for example, a cupcake store.

Solution: No matter what type of business you’re starting, these are the most common start-up business expenses that both home-based and store-based businesses need to calculate:

• Equipment – Every startup has some equipment needs. Make sure you calculate these for up to five years.
  
  
• Space – Whether you use your home or an office, you need business space. Even if you have a home office, be sure to factor in an increase in phone, Internet and utility bills.
  
  
• Marketing – Be sure to include additional cell phone time, business cards, advertising, flyers, printer ink, web hosting and paper.
  
  
• Networking – Make sure you factor in the cost of joining and attending local and regional networking events for the next five years.
  
  
• Transportation – Will there be a change in your traveling needs? More gas, less gas? New vehicle?
  
  
• Filing fees – Will your business be a DBA, LLC, NPO or Corporation? Does your new business require local, state, or national licenses? Regardless, you'll have filing fees.
  
  
• Banking – You'll need to have a business account at a bank if you want to accept checks and credit card payments under your business name. Don't run your new business through your personal account.
  
  
• Credit Card Processing – Merchant accounts, using PayPal, and even credit card swipe machines all cost money.
  
  
• Continuing Education – What classes, training and books do you need over the next five years to make you and your business successful?
  
  
• Professional Services – You'll need a CPA to get your books set up properly, an attorney to draft your contracts, and a business coach to help see you through the start-up process. Don't skimp here. 

2.  Should I get a loan right now? 

Whatever you do, don't take out a loan to get your new business started up unless you have a guaranteed client or customer base to start with. Why? Because a loan is debt. And to start out your business with debt spells disaster, unless you have clients and customers waiting in the wings. 

Problem: During our current recession economy, I've seen far too many businesses go belly-up because people relied on loans and other soft monies to start up, only to blow through that money without giving a thought to securing a client base beforehand.

Solution: Secure your client and customer base first, before you start up. Then, calculate your start-up expenses, plus five years, based on your guaranteed sales. This way, your start-up expenses will be manageable and you won't need a loan!

3.   Am I a good fit for my business?
One of the things I caution my clients against is starting up a new business that is more than two degrees different from anything else they've done before in their life or career. That's because if you extend beyond three degrees it is likely that you'll end up feeling overwhelmed with all that you'll need to learn and do just to get up-to-speed.  

Problem: You like helping people and running errands, so you want to start your own concierge business. It might surprise you to hear, though, that that may not be a close enough match to bridge easily. Certainly, being a "people person" is important. However, you also need to know the surrounding area in which you work and all of the amenities offered. Are you good at multi-tasking? How are your listening and communication skills? Do you have any experience owning a business or managing people?  You also may need to be certified in certain areas, such as travel and hospitality. 

Solution: One of the challenges of starting up a new business is making sure you have enough existing skills and experience in place to make a good fit for your new business. In this day and age you must be a good fit now!

Starting up a business is an exciting time when you’re filled with energy and enthusiasm. There are also some common temptations to watch out for during this time, including failing to properly calculate start-up costs, depending on a loan to start up, and taking on more than you’re qualified to handle. The good news is you can deal with these challenges simply by implementing these crucial start-up solutions. If you do, you'll bypass the three catastrophic mistakes most new business owners make and get off to a flying start.

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