Setting Financial Goals Should Be Part of Your Business Vision
Eight out of ten new businesses fail in a couple of years or less. Among the top reasons is they don’t precisely see the financial future of the business. Before you even begin to write your plan for the business, regardless of the kind of business venture, you will need to get an accurate vision of what your personal financial needs will be after you start your own personal venture. You can’t base your needs on your present gains, as you will find several other variables to add to the total including business permits, health insurance, and other business-related expenses.
While among the expenses of the start-up will be one-time fees or will represent annual expenses, other will be costs that are monthly and weekly. The very first step would be to ascertain what yourself and your family needs to meet your own obligations including rent or mortgage payments, utilities, typical home expenses, and food. If your partner is the one handling the household’s financial affairs, you are going to require their input in figuring out your minimal financial needs.
Once you’ve your home budget you can begin estimating business costs. You must still consider the part of the rent and utilities that will be represented by your tax deduction as a business expense, despite the fact that you might be setting up an office in the house and aim to take a business use of the home tax deduction.
The same should be planned for other costs as well as utilities, including a business telephone line. Though you likely possess a house phone, a separate line for the business is recommended to stop interruptions at home after hours, as well as to keep kids from answering the telephone when a potential client calls. It merely sends a more professional message when the business phone is answered in a professional manner.
Now it’s time to seriously take into account the projected income of the business. Recall it’s not just the business expenses you should cover. As an example, in the event you expect business expenses of $500 and personal expenses of $1,500 a month, anything less than $2,000 a month is going to leave you with outstanding bills. In the event the business you’re likely to open isn’t capable of delivering that amount of income, you might need to reconsider your prospects.
Even if the possibility is there for a minimum of $2,000 per month, you will need to be realistic about how long the venture will need to be running before that level is attained and determine if you have enough money to live until it does grow to the crucial amount.
So, should you be venturing into your own business, your initial step ought to be doing your financial budgets and projections. Financial goals are a significant part of your own business plan.