Today, I attended a business seminar in Salem, MA. that addressed the financial challenges of new businesses and what they needed for a business plan to receive funding from a bank or other financial source. In the audience there were mostly people looking to start new businesses that had never owned a business before and a few of us who have established businesses that were looking for new information. As various attendees asked several questions about how they were suppose to start a business with no money and how would they pay themselves in the first couple of years, I realized why so many businesses fail within 3-5 years. The idea of investing in your own business or using your home as a way to secure a bank loan seemed like an outrageous request to some of these people sitting in the room. And, as a marketing coach/advertising agency, the reaction in the room pointed out one of the key reasons why so many businesses fail….if you are not willing to invest in your own business, then do you really believe in your success?
If you start a business and your first thought when you receive your first payment from a client is to pay yourself out of that check you are hurting the foundation of your business. Cash is essential to the operations of your business and marketing and advertising costs are something business owners hate to spend money on, but they are the driving force to helping you make sales. If you cannot go without drawing a paycheck for at least a year or two so that you can build a reserve of cash for your new business and use the money from your sales to generate more sales with a marketing strategy and an advertising campaign, then chances are you will never get your business off the ground. No matter your great ideas, if you do not have the cash flow and the belief in your company to invest in your business, your company will probably be one of those statistics that you hear in the news about the percentage of businesses that fail within the first few years.
So, as you are reviewing your business plan, do you have a marketing strategy and a real budget for advertising your business? If I called you today would you know how many items you have to sell or services you need to provide in a week, a month, or a year to hit a break even point in your business so that you could actually know when you are making a profit? Do you have set sales goals in place and a sound marketing plan to help you reach these goals? Do you have money in the budget for advertising? In short, do you truly believe in your own business and are you willing to make positive steps to building a strong foundation to grow on?
All my best to your success! ~ Charlene