How to Start a Small Business
By leadership author and keynote speaker Ross Shafer
You want to start a small business but you don’t want to blow your life savings doing it. Good. I want to talk to those of you who are dying to start your own business…but you’ve heard that 50% of all small businesses fail within five years.
First, the statistics are right. 50% DO fail…but why? The biggest reason is RUNNING OUT OF MONEY…which is why you see entrepreneurs going on Shark Tank to get more funding. But if you can’t get the Sharks to give you money I can help you survive. First, You must understand what Cash Flow Means. Cash Flow is the flow of money coming in – and cost of doing business going out. Cash goes out to pay expenses like rent, utilities, licenses, taxes, a helper, and to pay off any debt on equipment you bought to get started.
Just like your household, you will only survive if you have more cash coming in than you have going out. Poor money management is the #1 reason so many companies go bankrupt. Which is why I recommend that you, Don’t quit your day job….you will need an income stream to pay your existing household bills. Because there is no way you can depend on a startup to pay you, yet. I encourage you to start your small business at home…online. Work at night…or get up an hour earlier in the morning to do this. Why? Because you don’t even know if there is enough demand for what you want to sell. Test your business idea with a free website on WIX.com.
Sign up with PayPal to take credit cards and checks. Get the word out about your home business by emailing your friends and neighbors and posting on your social media sites. There is no better time in your life to start a small business for under $500.
The second biggest reason small businesses fail is EGO. You think being an “owner” will impress your friends. It’s not true. Too many people are overly anxious to sign a lease on a storefront. They want to hire employees so they can take time off. They want a new car because they think they can “write it off” as a business expense. Don’t fall into these traps. Keep your expenses as low as you can for the first 9 months. Find out what sells, what doesn’t, learn what prices customers will pay, figure out how you can buy your raw materials for less, meet other people who can refer business to you.
Finally, learn to be an obsessed bookkeeper. Keep track of every dollar you take in and all of the money you spend. Don’t buy anything new for your business until you see that your bank account is consistently growing. That’s the kind of money management that will help you beat the odds of failure.
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Ross Shafer is the author of (9) popular business books and (14) human resource training films. In a former career Ross won (6) Television Emmy awards for his work as a TV host, writer, and producer. Today, Ross is a sought after keynote speaker and consultant for Fortune 500 companies worldwide.