In my opinion, lack of funding is the main reason many startup businesses fail or do not even start trading. I have seen many potentially successful businesses in financial difficulty because the entrepreneur did not calculate how much money was needed to set up the business and keep the business trading, especially in the first year. I always advise my clients to prepare the following documents before they start up: a simple start up table, a profit/loss forecast and a cash flow statement forecast to calculate the total business investment needed and the total working capital. I am not going to explain in detail how to prepare the financial statements now as I would like to concentrate on calculating the total figure the entrepreneur should have in mind before committing himself to open the doors of his business without risking a financial disaster. Let’s start with the startup table.
New entrepreneurs always ask me how long it will take them to start up their businesses. I usually ask them as many questions as I can in order to give a more accurate answer. During our first consultation, I often realise that entrepreneurs have not done enough research or initial study in the market to understand where their businesses will be heading to. The most important lesson you should know about starting up your own business is: Do your research and ask yourself as many questions as you can before you invest a penny.