Millions of small businesses exist in the U.S., with that number fluctuating constantly as thousands close and even more open every single day. If you are thinking about starting a business of your own, there are a few steps you should consider first. While there is no exact recipe for success, answering certain key questions will improve the odds of a thriving business and reaching your goals.
Answering the following 7 questions will help you determine whether the timing is right to launch your business venture:
1. Am I ready to start a business?
Running a business takes passion, commitment and a willingness to take on any challenge. Many successful entrepreneurs also share certain qualities. You must have a willingness to sacrifice, for example. Entrepreneurship requires many more hours than the forty-hour work week, the nine to five. You will also need strong interpersonal and leadership skills. Are you ready to instruct, encourage and guide a team? Above all, you will need perseverance. Are you driven by an indomitable spirit that will help you hold onto your vision even when business gets tough?
2. What are the benefits of having a mentor?
A business mentor can help you take your business from surviving to thriving. Their invaluable advice and guidance can transform you from a promising businessperson into a successful one. Mentorship is a guaranteed way to gain experience from others – experience not shared in books. With their valuable connections, timely advance, constant accountability and positive reassurance, a mentor can leapfrog you to success and help you stay in business longer.
3. Who is my ideal customer?
One of the most important questions to ask is, who is my ideal customer? Put simply, your ideal customer is someone who has their exact needs met by what you are offering. Knowing your customer goes beyond their basic information; it involves really understanding their motivations, pain points and personalities. When you have this information – these audience personas – you will be able to develop products that meet their needs and market to them in the best way possible.
4. How do I calculate my startup costs?
Many new entrepreneurs make the mistake of borrowing capital to cover costs, only to find that they still do not have enough money. The key to avoiding unforeseen financial surprises is to have an educated idea about startup expenses before you launch your business. You can accomplish this by making three simple lists: spending on assets, spending on expenses and how much capital you need to get started. Compiling these lists should give you twelve months of estimated sales, costs of those sales and expenses.
5. What should I know about financial statements?
It is crucial that you know how to interpret your business’ financial statements. The most powerful financial tools you have are your business’ income statement, balance sheet and cash flow statement. Combined, these three basic financial statements provide the most comprehensive view of your business. You will be able to assess your cash position, profit and financial conditions during a specific period of time. Most importantly, a basic understanding of these statements will help you determine if something is happening in your business that needs your attention, before it becomes a problem.
6. Why is it important to do a monthly cash flow analysis?
Profit does not necessarily equal success. Even if your business shows a profit, it is possible to experience negative cash flow during the same period. Your business’ cash flow cycle can differ significantly from its income statement projections. Completing a monthly cash flow analysis will help you determine whether your business is collecting sufficient cash to pay operating expenses. It will also reveal which months during the year your business may be short on cash, allowing you to seek out additional capital before it hinders day-to-day operations and growth.
7. How do I obtain cash to maintain and grow my business?
One of the top questions entrepreneurs have is how to obtain the extra cash they need to grow their business. Contrary to popular belief, the traditional bank loan may not be your only – or best – option. There are countless alternative lending options that may prove to be better for your business’ long-term financial health. Invoice factoring, for example, is a financial tool that turns your business’ unpaid invoices into immediate working capital. Since you are receiving money your business has already earned and is waiting to be paid, there is no debt to repay. What matters most is choosing the funding option that best suits your business’ unique needs.
All in all, it is impossible to know every sacrifice and challenge ahead of you. However, carefully crafting a plan before you dive into your business can reduce the chances you overlook a key detail that holds your business back.
4. How do I calculate my startup costs?
Many new entrepreneurs make the mistake of borrowing capital to cover costs, only to find that they still do not have enough money. The key to avoiding unforeseen financial surprises is to have an educated idea about startup expenses before you launch your business. You can accomplish this by making three simple lists: spending on assets, spending on expenses and how much capital you need to get started. Compiling these lists should give you twelve months of estimated sales, costs of those sales and expenses.
Secure fast funding to help your startup grow
If you are searching for alternative financing solutions, make sure you consider the benefits of partnering with a reputable invoice factoring company like Bold Business Capital. The invoice factoring process allows you to sell your business’ outstanding invoices to the factoring company, at a small discount, in exchange for a quick advance of funds. You can have cash on hand in as little as 24 hours, you do not incur any debt and you secure unlimited funding potential. Your business not only secures help with managing past-due receivables, but also access to the capital it needs to operate smoothly.
To learn more about how invoice factoring works and how it can help your business grow, contact our cash flow experts at Bold Business Capital to get started.
