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How To Get Yourself Financially Ready for a New Business

Financially ready for your new business

Every business starts with an idea even if it is a highly competitive market.  Following that thought is one that focuses on money.   Many assume that if they don’t have a good amount of capital then it just isn’t feasible.   If you are the type of person that really likes to have a lot of security behind them then chances are you will never feel that you have enough money not only to start your business but give you an income right from the start.

The starting point is to look at all the ways that you can reduce your financial risk.   Most likely your concept of your business is when it would be at its peak and the money would be pouring in.   This is not going to be the case in the beginning no matter how viable the business is.   There are always some type of growing pains and hopefully these are minimal.

The first thing you have to is develop your business plan.   No business will get off to a good start without one.   Plus, if you do need to obtain financing then you most likely will have to produce your business plan.

The next thing you have to realize is that there are some start up costs that you cannot avoid.

If you are going to incorporate your business then there will be costs to do this.   Even registering your business name comes with a small cost.   Then depending on your business you will need space.   No matter how big or what type you will probably be expected to put a down payment down on the least.   On an average this is 3 months worth of rent in advance.   You will need a certain amount of equipment, at the very least some administrative equipment.   This would be your computer and your telephone system at the least, although you may get by with your cell phone.   Then you may need your operating equipment that pertains to your business.

These are usually the major start up costs.

Then you have to ensure that you are financially stable where you don’t have to count on the business for personal revenue for a period of time.   When you do your business plan it should include some type of projection as to when you think the business will turn a profit.

You should plan on when you reach this stage not to bleed your business dry each month by taking out earnings.   Keep a set amount for cash flow, and count on putting a portion of it back into the business for its growth.

This gives you the basics of getting yourself financially set to start your business.   For your business to reach its full potential is going to take time.   Don’t be over zealous with your spending at least not until the business is stable.   Work both financial concerns towards the middle, meaning be as concerned about your spending as you on generating the revenue.

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Sam Seidman, CPA, CA, LPA
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Email: sam@torontoaccountant.ca

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