Month 4: Calculate the Costs
It's critical to determine how much cash you'll need. Create a checklist of expenditures. List the equipment, supplies and people needed to operate your business. Itemize startup costs for inventory, signage, sales and marketing literature or tools, research, licenses, permits, operating capital, and legal or professional fees. Calculate your monthly overhead for rent, supplies, utilities, business and health insurance, taxes, Internet access and other services. Factor in your salary and employee or contractor wages. Refer to industry specific startup books and resources for additional costs that may apply to your respective business type. Tally and double-check the numbers before you begin your money hunt.
- Use Entrepreneur.com FormNet's finance forms --including Business Startup Cash Needs, Business Insurance Planning Worksheet, Personal Cash Flow Statement and Development Budget Worksheet--to help you figure your startup finances.
- Entrepreneur magazine's What If? software allows you to easily forecast your new business's finances, calculating the numbers for you and generating charts and graphs you can use in your business plan.
Month 5: Write Your Business Plan
You gain an advantage by building your business on paper first. A business plan's value goes beyond its ability to help secure a loan package for you. It's a working document that helps you prepare for opportunities as well as difficulties.
The body of a business plan can be divided into four sections: the description of your business, the marketing plan, the financial management plan and the management plan. Addenda to the plan should include an executive summary, supporting documents and financial projections.
Writing a plan forces you to think through every aspect of your venture. The process will convince you to proceed with your idea or look for a new one. Glean some inspiration and guidelines from resources below.
- Read Rule's Book of Business Plans for Startups by Roger Rule.
- Check out Creating a Successful Business Plan, an Entrepreneur magazine Start-Up Guide.
- Download or print the SBA's free business plan guide.
- Visit out our Business Plan section for articles and resources to help you write your business plan.
Month 6: Identify Sources of Startup Financing
Many entrepreneurs self-finance their businesses through personal savings, loans or credit cards. You may also be able to match your qualifications with a microloan: Private and SBA-backed agencies make loans from a few hundred dollars to $25,000. You can find a local microlender through the SBA's website.
You may also qualify for a niche or specialty loan. A new lending and learning organization called Count Me In makes loans from $500 to $10,000 to women entrepreneurs. Wells Fargo and Bank of America offer special loan programs for women, minorities and small-businesses.
Although there's no such thing as "free money" for small businesses, there are some cash awards, prize money and minigrants offered by a dwindling pool of organizations. Begin your search in Awards, Honors & Prizes, a publication by the Gale Group that should be available at your local library.
Whatever your funding source, remember to incur any debt in moderation. You'll make better business decisions when you're not under the pressure of heavy debt.
- Learn more about microenterprise loans here
- Search America's top microlenders in Entrepreneur.com's Best Banks for Entrepreneurs database.
- Find out more about financing for homebased businesses in The Search Is On and Best Sources for Homebased Expansion Capital.