Know Your Money Needs
Many people put off starting their own business because they don’t think they have enough capital to finance the start up. Jill Jorgenson, Region II director wrote an article for the February 2006 Business Times addressing this very topic.
It turns out that 60% of new startups need $5000 or less and only 3% need more than $100,000. The financial issue that should be a concern is not where the initial start up money is coming from but where is the cash coming from to sustain it. How long until the business begins to sustain itself month to month?
There are several tools that will help a potential business owner calculate these costs. They are a budget (seems obvious, doesn’t it), pro forma income statements, forecasted cash flow statements, and break-even analysis. These tools will help you and the investors see how much money is needed, where the money is coming from, and most important to your investors, when is the return on investment going to show up.
These documents and a business plan should give any future small business owner the courage and structure needed to face the dreaded loan officer. More importantly than that, the dream will become a reality.
For the full article, click here.
There are no comments for this entry.
[Add Comment]