Many entrepreneurs are unemployed or underemployed, and have lots of time but very little money.
In that case, you must be judicial about the level of service you will need from a consultant.
She is able to raise enough money, between loans and her savings, to put $12,000 into the starting cash balance. Then she launches and continues to have her monthly reviews, and watch the performance of all key indicators very carefully.
You’ve decided you need a business plan, but you’ve been struggling so much with it that you’re ready to drop the whole thing. If you are just toying with an idea, or have not invested much time in research and planning, you may not be ready to think about a business plan.
Magda did that to determine the $12,000 needed as starting cash for her restaurant.
Note how, in the illustration here, the lowest point in cash is slightly less than ,000: That low point comes, theoretically, in the third month of the business, March. Obviously that’s just an educated guess, but it’s based on assumptions for sales forecast, expense budget, and important cash flow factors including sales on account and purchasing inventory.Books have to balance, so the initial estimates need to include not just the money you spend, but also where it comes from.In the case above, Garrett had to find 4,500, and you can see that he financed it with Accounts Payable, debt, and investment in various categories.I included rent and payroll because they point out the importance in timing.The difference between these as startup expenses and running expenses is timing, and nothing else.Here’s a visual in spreadsheet form, of sample starting costs for a hypothetical bicycle store.Notice that the lists for estimating starting costs, on the left in the illustration above, are matched to another list of starting funding, on the right side of the illustration.Breaking the items down into a practical list makes the educated guess a lot easier.Ideally, you know the business you want to start, you are already familiar with the industry, so you can do a useful estimate for most of the startup costs from your own experience.How much cash do you need in the bank, as you launch?That’s usually the toughest starting cost question.