Tag Archives: Self-Employment

Financial Reports That Help You Understand Your Business

Too often, business owners who get into trouble don’t even know they’re insolvent until the landlord puts a lock on the door.

A business plan sets the owner up with a basic understanding of business financials, and helps avoid the carnage. All business plans should include a cash flow forecast, pro forma income statements and balance sheets. In addition to these three critical components, there are a number of other financial reports that can help entrepreneurs understand how their business works.

Here are nine financial reports and a brief explanation of each.

  1. 1.    Sales Forecast. A first year, 12-month projection of the number of units and the values for each product or service you will sell. A good sales forecast shows slower times, busier times and growth or shrinkage – it is the basic building block that enables owners to determine whether or not the business will bring in enough money to meet their financial expectations.

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Beyond the First Small Business

Once an entrepreneur makes a success of one business, there’s a dangerous tendency to think he can duplicate his efforts in another business, and then another, and another. Spreading yourself and your resources over a number of ventures can impair your ability to deal with financial and other challenges. Aside from stretching finances, getting pulled in too many directions can deplete a business owner’s time and energy, making it difficult to maintain the core business that brought about the initial success.

The key to avoiding this killer is to know your abilities and be sure to keep enough energy, cash and focus to maintain your core business. When you’re tempted to spread your wings and become a raving capitalist, the first question to ask yourself is how much time, energy and money you can afford to invest.

  1. Assess Your Current Situation. The time to consider branching out to own different ventures is after you’ve made your core business successful and honed your time management to the point that you have time to invest in other things. A starting point to investing is to take a close look at where you’re at with regard to the core business. Is it running smoothly? Where is it at in the growth cycle? How much of your time is needed currently to run the business? Will it require more of your time and energy in the future?

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To Business Plan or Not: Is That Really the Question?

After coaching many people through the eye of the business planning needle, I’m intrigued and bewildered by the gap between “what business planning is” and “what people seem to think it is.” Time and again I see intelligent people going to great lengths to avoid business planning when it’s exactly what they need to navigate the complexities of start-up.

Whether they admit it or not, those who succeed in business do some sort of planning – or hire someone to do it for them. The pieces of a successful business don’t fall into place perfectly by themselves without some kind of high-level roadmap to get them flying in formation. The elements of success come together because someone—usually the business owner—plans, agonizes, organizes, pampers, and weaves the threads together to achieve the desired positive result.

So, what is this aggravation called business planning? Continue reading To Business Plan or Not: Is That Really the Question?

A Self Employment Checklist

Entrepreneurship has always been a key driver for job creation in our marketplace, and small businesses will continue to generate the lion’s share of new jobs in the future.

When it comes to job creation, there’s no playground quite as exciting or readily available for new entrants than the world of self-employment. While stepping into business is not for the weak or weary, it holds great promise for anyone with skills to market and a modicum of get-up-and-go.

Here are a few questions to ask yourself as you consider joining the ranks of the self-employed. Continue reading A Self Employment Checklist

Myths about Owning a Business

Successful business owners make running a business look easy. Observing from the outside, it’s easy to imagine that they harvest massive rewards with little or no effort. That is just one of many misconceptions about owning your own business. Here are a few more:

1. A Business Is a Get-Rich-Quick Scheme.
It’s more accurate to say that most “overnight successes” take at least 25 years of hard labour. An entrepreneur is a twisted individual who will work 15-hour days at minimum wage to avoid taking a real day job at $20 per hour.

2. You Need a Lot of Money to Start a Business.
Some businesses do have a high start-up price tag, many do not. If you are a tradesperson who owns all the necessary tools to work for someone else, you might already have most of what you need to start your own business. Many people start small enterprises by investing a lot of sweat equity and little or no cash. Continue reading Myths about Owning a Business

Make a Plan to Succeed in Business

The most important reason to write a business plan is probably to save your house, or grandma’s nest egg, or whatever investment you are putting at risk. A business plan will help you learn more about your business and serve as a tool for communicating with others, such as bankers or investors.

Here are seven things to know about business plans:

1. Most businesses are started without written plans. For the most part, plans only exist on a napkin or in the owner’s mind. Business planning is an unfamiliar trek for most people, and too often the task is avoided until they are urgently needed to get a loan.

2. By the time a business plan is printed, it is probably already out of date. Enterprises continually adapt to their surroundings and the plan is a living document that gets updated at strategic times.

3. Business planning is an organic, non-linear process. At any given time, you will be more knowledgeable in some areas than others. Effective business plans arise from building on strengths, developing strategies to mitigate weaknesses, and innovating as you learn more about your business.

4. The further a business plan projects into the future, the less reliable those projections will be. It’s entirely likely that year five predictions will be less accurate than year one.

5. A professionally prepared plan does not guarantee a business will succeed. A picture-perfect business plan is not worth the paper it’s written on unless the owner understands it thoroughly. The real value of a business plan is the knowledge you gain by doing it.

6. Plans that call for aggressive early stage spending will meet with resistance, especially where the shopping spree is predicated on using borrowed money. It’s usually healthier for a new business owner to solve problems through innovation, ingenuity and frugal investment of available resources.

7. While a business plan will help to increase your knowledge about your business, it will not do much toward helping you develop business trade skills, such as how to handle money, how to buy, sell and pay. Business trade skills are more likely to be learned from managing a paper route or operating a lemonade stand. Owning a business is the best way to learn the basic survival skills like knowing how to read the market, how to learn from it and how to change your mind.

Your business plan is more for you than it is for your banker. It will enable you to prove your business case, and to be reasonably sure that your venture can survive.

Once you’ve debunked your own assumptions and gathered enough evidence to demonstrate viability, you’ll have more confidence in your business idea. Armed with a better understanding of your business and realistic financial projections, you will be much better positioned to discuss your business with those who might help you.