Thinking of Starting (or Growing) Your KC Business? Use These 3 Fundamentals to Find SuccessDavid Cawthon
By guest contributor Natalie Santonil, business adviser, freelance consultant
As a business adviser, I work with many clients who want to start and grow their business. Although each client has various strengths and weaknesses and levels of experience, they all need help to turn their idea into a reality.
So if you’re in those early stages, how do you move forward? These three fundamentals will help you get your goals off the ground. Perhaps you’re looking for money to start your business or reach that next milestone? Maybe you still need to test if your idea will make money? Or perhaps you can’t seem to get organized to start the business? If any of these questions fits your situation, read on.
Funding the business idea
Unfortunately, free money to start a business does not exist, so if funding from family and friends is off the table, that means you’ll need to seek outside funding. Investors and banks want to see that you have skin in the game and typically will only loan or invest up to 80%. Prepare at a minimum to show banks or investors that you have 20% cash to put toward the total need. It shows you are serious and willing to take on some of the risk. If your business industry is high-risk (i.e., restaurant, retail), you may need to show them you have more cash. Banks and investors are lending, but they need to see you are willing to bring some of your own funds and risk to the table.
Forecasting the financials
Ensure you develop a three-year forecast that summarizes all of the financials for the business idea. The forecast should include total startup cost, a breakdown of your cash and funding request, payroll and operating expenses, and three years of your cash-flow statements.
This forecast has two purposes. First, it gives you a reality check. Can you afford to leave your job to start this business? Second, it provides the banks and investors with a tangible tool to analyze your business idea. As the Kauffman Founders School notes, “View finances not as a dark art, but as a powerful tool to help you build a successful company.”
If you are able to develop your own financials, I recommend you keep it clean and easy to follow. Start with your startup expenses and a consecutive year of cash flow.
Focus on the bull’s eye
I’ve seen countless entrepreneurs try to start a business on their own. They try to become a social media, financial and strategy wizard, only to find that they still have not started the business … or worse, have found themselves in a bad situation.
Stay true to your passion and strengths. Know what you are capable of doing and where you need help. Hire quality help to delegate areas where you are not strong. If you are not a social media wizard, delegate to someone who is. If you are not strong with numbers, figure out who can help you. If you have been struggling to start or execute on your business idea(s), ask someone to hold you accountable.
Focus your energy in the areas where you are most strong. This will help you to make strides in starting or growing your business.
Natalie Santonil is a business adviser and provides freelance consulting for entrepreneurs so they can gain access to funding for their business needs. You can reach her at 316-651-6393.