Planning For Retirement Prepare A Schedule Of Monthly Business Expenses.
Going back to fundamentals, you need to generate positive cash flow, which is not the same as generating revenue. Positive cash flow occurs when your revenue exceeds your expenses. Your net cash flow must cover your personal expenses. If these numbers don’t work, you’re going to put stress on yourself and nothing positive comes from stress. That’s why I strongly suggest having the 1-year expense cushion.
These numbers are only estimates, your actual expenses will be different. I highly recommend overestimating these. Inevitably you will get hit with unexpected expenses, both business and personal.
MONTHLY BUSINESS EXPENSES
So, you crunched the numbers and are determined to move forward. Many times, I have found that entrepreneurs move forward despite what the numbers look like. I’ve done it and learned very expensive lessons. Some of those lessons turned out to be invaluable lessons, on what not to do, while some worked out proving my intuition was right all along. If you are one of those that choose to move forward, despite what the numbers look like, I highly suggest you read my book “From Myths To Money” available on Amazon. Have faith and tenacity, you’re going to need it!
These are your options when it comes to your legal structure as a business. If you don’t formally choose one of these, you are a Sole Proprietor by default. If you create a Not-For-Profit and don’t set it correctly, you can face some serious legal repercussions. Before you do anything, seek the advice of a good accountant and/or tax attorney. I say accountant and/or tax attorney. Because most attorneys are not versed in tax strategies. Choosing the wrong structure can cost you a significant amount of money.
- Sole Proprietor
- “S” Corp
- Not for Profit
Most starting business checklist and small businesses should be structured as an “S Corp” for legal and tax planning purposes. I’ve seen many new business owners and business ideas, choose to be structured as an LLC without knowing the tax implications. I have included an article on being taxes as an LLC and self employed vs being taxed as an “S Corp”. For more information download my FREE copy of Business Structures
1: NEW BUSINESS CHECKLIST – 1 OF 10
Failure is not an option, starting out on the right path is. A vast majority of business failures are the result of simply not knowing what you don’t know, what you need to know.. Most entrepreneurs face a rapid succession of crucial business decisions on subjects they never encountered before. Many don’t know a good professional, and/or can’t afford one, so they do what any good entrepreneur does, they wing it. “Winging it”, when it comes to starting a business is not the best option, using this article is. That doesn’t mean you should use this as a replacement for a professional, just as a guide that will inform, educate and empower you.
Don’t waste your money! Before any business starts, and needlessly spend money they skip over the 1st fundamental step of every business, which is the viability of the business. There are some simple steps to take before formally launching. I cover that in following blog posts.
Having money to spend on your business can actually be a detriment. Many enthusiastic entrepreneurs tend to overspend on things that won’t necessarily increase their odds of success, myself included! Laying out a few simple budgeting items can make or break you, especially if you have limited funds. I cover this in steps 2 – 4.
Legal, tax and insurance compliance, and administrative issues, if not correctly implemented from the start can cost plenty, in both time and money. I cover these in step 5 and Other Relevant Issues.
So, before quitting your day job to open your small business ideas list I strongly suggest reading the entire series. Good luck with your venture!
Prepare A Monthly Personal Expense Budget.
You need to determine how much you need to generate in distributions from your business to at least meet your monthly outlay. Unless you are already out of work with no other income options, you need to keep paying your bills. Don’t just quit your job unless you have at least a year’s worth of savings to carry you through.
The reason for this is that without a cushion you will feel the stress of having to make money. Stress clouds our judgment and drains our energy. You always need to be in tip-top shape mentally and physically. You’re going to have enough distractions and obstacles, to begin with, and don’t need to add any self-imposed burdens on yourself. Additionally, knowing what you need is 1,000 times better than operating in the dark. Knowing your numbers is essential if you want to run a successful enterprise.
On the next page, there is a simple worksheet to help you to determine your monthly nut. Don’t make the mistake of omitting things like meals and entertainment, vacations, holidays, birthdays and the all-important surprises that are sure to occur like the car and home repairs. If you have children leave a nice big fudge factor. This is just your expenses, not revenue and not even broken out on a monthly basis. It’s just an estimate. So, don’t go into needless details. Keep it simple!
PERSONAL MONTHLY EXPENSE SCHEDULE
DWELLING REPAIRS / IMPROVEMENTS
CAR REPAIRS / MAINTENANCE
BIRTHDAYS / HOLIDAYS / VACATION
DOCTORS / DENTIST
LOANS AND CREDIT CARD PAYMENTS
After checking off the personal expense budget, one of two things will happen.
Reality will set in and you will realize that starting a business checklist is a big risk, not worth taking or to proceed with caution.
You want to go on to the second item on the list.
Prepare A Schedule Of Startup Cost.
These are the expenses and capital investments associated with getting the business off the ground before you start generating revenue. This is another potential blow to your plans on starting a business. Reason being is that entrepreneurs are full of enthusiasm and optimism, which is needed, but also one of the characteristics that get us into trouble. Getting the numbers down on paper brings us down to earth revealing exactly what’s at stake financially. It’s also the first step in learning how to know your numbers. Part of running a small business ideas list and successful business is knowing your numbers.
BUSINESS STARTUP COST
1ST MONTH RENT / RENT SECURITY
COMPUTER / OFFICE SUPPLIES
LEGAL / ACCOUNTING
If the information here resonates with you, and you have questions, comments and or suggestions let’s talk! Click Here.