Starting a new venture?
Though there is the romantic notion of “build it and they will come,” that is not the business plan you should take to the bank or use as your platform to launch your new initiative. Granted there are success stories where this has happened, but it is a better practice to plan for a traditional startup and then just be pleasantly surprised if a miracle happens. You will be just that much better off.
Let’s talk about some basics. Are you starting a new business? Are you launching a new department or product line? There really isn’t much difference and there are some inherent costs in both situation.
To ensure your success you should draft a strategy, create a realistic business plan.
Here is a list of some basic items you should take into consideration when planning for your new venture. Every situation is unique but this is a start:
• Initial Parnter Fees or Franchise Fees
• Real Estate
– Purchase price, closing costs, and legal fees
– Lease Costs: Security deposit and 6 months of lease payment in reserve,
– Build-out costs.
• Fees, Permits, Agreements
– Business License [City, County]
– State Filing Fees
– Landlord Fees
– Permits: construction, signage etc.
– Utility Deposits
– Legal: Zoning permits; partnership agreements; licensing agreements
– Liability Insurance
– Workman’s Comp
– Fleet Insurance
• Travel and/or Training Expenses
• Fixtures and Equipment
• Exterior Signage
– Branding – [can include: logos, print collateral, web site, eMarketing templates, business cards, etc.]
– Grand Opening advertising or Launch announcement
– Advertising: 6 month budget – [can include online marketing; print advertising; emarketing campaign; special events and/or trade shows]
– Travel [6 month budget if applicable]
• Working Capital! [Minimum three month to cover all expenses during initial start-up, includes: payroll, payroll liabilities, utilities, advertising, inventory]
I think you get the idea. It is important to sit down and think of any and every possible expense you will encounter in the first year. Your working capital probably cannot cover a full 12 months of your start up but you cannot open the doors or invest in a new product line without at least three month of working capital set aside. You need those resources to advertise and build a customer base.
But most of all be patient. Building a solid customer base takes time. Remember, a strong loyal customer base will sustain your company’s growth and help assure your success. That’s what makes having a well-funded business plan so important. A solid plan buys you time to nurture you customer base and develop a strong foundation for the future.
If you have a well-crafted Plan A, you probably won’t need to fall-back to a Plan B. So whatever your venture, plan well and all the best of luck.