Friday, January 30, 2009

How Much Do I Need?

You just got laid off and you're thinking about starting your own business...
  1. You don't know if working for yourself is something that fits your personality
  2. You're not sure how feasible your business idea is.
  3. You may not have a clear business idea.
  4. How much will it cost?
Let's all just have a good, nervous laugh here...
I was actually putting this post off today because I had a lot going on. If I remembered what I was supposed to write, I'd have put it off anyway! (But I did not watch CNN all day...)

So, let's get to it. I'm going to cover both bases in this post, service and product-based businesses because the first one is pretty easy. I will start though with a quote that I'm afraid I cannot correctly attribute, but it goes like this: "When you're a consultant it's like you're 'renting your brain'."

What this person was trying to say is that you have a limited amount of hours in your day a limited amount of days in your year to bill. The big "B" Billable Hours. That's fine. You can start there. You can think about these things:
  • How many hours do I want to work?
  • How many clients do I want to serve?
  • What is the standard rate in my community for what I do?
  • Can I do any of this or all of this from a home office?(sub-topic to be covered later)
  • Does this all tally up to the amount of money that I need to bring in or do I need to re-hash the numbers?
  • What will be my goals for all of the above on a monthly or quarterly basis for my first year and can I live with that?
Okay, the next set of issues to think about is for a product-based business:
  • Am I creating this product or is someone else?
  • Do I have the numbers on how much production will cost?
  • Do I have the numbers on how much inventory I will need (if any)?
  • Do I know what my overhead will be on a monthly basis for the first 6 months?
  • Do I need to hire other folks right out of the gate?
As you already know, the product-based business is going to need some up-front money. You really need to think "worst-case scenario" here and assume little to no income for 6 months to be safe.
Remember again that you can choose to not pay yourself to work in a store that you own, but you must pay yourself something to produce a product or your business plan will never work in the future.

When you get someone to help you with a business plan, this is really going to be the "meat". And, this "meat" changes all the time. Leasing rates change, credit possibilities change :::clearing throat::: And lastly, your competition and what the market will bear will change. Make sure your plan is up to date!

A PR specialist asked me yesterday what would I expect from a PR firm as a new business owner, hiring a firm for the first time. I said that I would want a great article about my opening business in the local business journal and some ideas about what kind of event to hold and who I should invite (and how to get them there) would be a start.

I thought I'd share that with you as a thought about marketing. Now, one last thought:

Sometimes we spend an awful lot of time doing the things that are easy and comfortable for ourselves, even when we're starting something new. I'd like to challenge you (and me) to work on that a bit and try a new "something" every day to get us closer to where we want to be.

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