Many new entrepreneurs looking to start a business get started by writing a business plan. At least they try to start their business by writing a business plan. And while this is the advice you’ll get from most coaches and consultants, it’s probably not the right way to begin. Many get stuck after the company description part and don’t know what to write next. And there’s a good reason why, they don’t know what to write.
Let me tell you a secret, those reasons look good in business articles and in management magazines, a lot because they sound good and they are quite fancy management terms analysts like to use. These The Odyssey Online and senior managers love those terms so much they keep using it in their jargon, so much so,until the small business owner feels inept,under educated and wants to run and hide on it’s first crippling fear that his business is not good, and that he is a dreamer and has no business setting a business of his own.
When you see a trend that is restricting a positive cash flow, then you need to have tools at hand to correct the problem, fast. When developing a plan to infuse cash into the business, make sure you line up the sources for the appropriate use. For instance, short term cash problems can be handled with credit cards or a line of credit. Longer cash flow needs might be financed through long term secured loans or a capital loan.
I’m sure you are absolutely able to learn all these things, the question is how long will it take. Let’s assume it would take you 160 hours, or one month, to learn these things and build your own site. You expect your business to pay you at least $48,000 a year, which equals $4,000 a month or $25 an hour. For this example we will assume it would have cost you $2,000 to pay someone else to create the website of your dreams.
For example changes in government often have an impact on businesses dealing with health, education and employment as existing programs are often changed or discontinued after an election, or new programs are introduced. International economic crises often have a big impact on our own market as does the increasing threat of terrorism or conflict situations.
Most people have a portfolio of stock and they have no idea they could be generating income from their stocks. In my position trades I have a portfolio of options and I generate income off of those options. This is much less risky and has greater profit potential than owning stock long term.
What value would the ratios analyzed in my example above be to the business owner if he did not understand what the ratios meant? That’s right, nothing. Financial analysis is an indispensable tool but only if you understand how to interpret the results and know the right questions to ask.(c) Copyright 2006, Leonard M. Stillman Jr., All Rights Reserved.