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Small Business, Big Costs
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One of the most common mistakes people make when starting or expanding a business is not having a proper business plan. They are ready for start-up expenses but forget about the costs of actually running the business.
Trend spoke with Craig Harston, small business specialist and counselor for the Tennessee Small Business Development Center (TSBDC), about the best way to avoid financial problems with your business. |
Q: How can I avoid cash-flow problems with my business?
A: A lot of times, I see people who factor in the costs of the equipment, license, insurance, rent, property, and merchandise but neglect to consider the cash it takes to run a business on a day-to-day basis. Most businesses will not be profitable in the first few months of operation. This is especially true when there are a lot of up-front costs—like inventory and advertising—that have to be paid before the first customer walks in the door. Bank loan officers understand this growth problem and can often apply a line of credit to help.
Q: What can I do to better prepare myself for realistic financial expectations?
A: TSBDC, SCORE, and the Southeast Women’s Business Center all can help you develop carefully projected cash analyses. This, combined with future monthly budgets and a market plan for potential sales, can help you be better prepared with more realistic expectations.
Q: How can I avoid overestimating my profits?
A: Develop a market plan that has low sales in the beginning and builds slowly. It’s easy to think that you’re going to have $1,500 in sales a day, when you could actually have less than $100 a day for the first month. Watch what happens in the beginning and plan for contingencies.
For more information about business planning, contact the Tennessee Small Business Development Center at (423) 756-8668. TSBDC is located in the Chattanooga/Hamilton County Business Development Center at 100 Cherokee Blvd., Suite 202. |
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