How To Make Ends Meet When You Own A Business

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Although owning your own business may be the "best thing I ever did," it has its
drawbacks, especially in the early days. Many people have unrealistic ideas about
business ownership, thinking that it's going to provide them this six figure income right
from the first day, especially those who buy into a franchise or established retail business.
When they find out that they aren't earning the income they thought they would, they
begin to worry that they have made a mistake in judgment and worry about making ends
meet. Pre-planning solves a great deal of stress that is involved when building your
business during its early creation.

The reason many new business owners have trouble making ends meet is because they
fail to plan properly for the days that are going to yield less income. On average, it takes
a new business anywhere from three to five years to turn a decent profit. That is true even
of a franchise since those early days will involve more income going to the franchise
corporation than the franchise owner, so you have to make sure that you plan for that.
How can you plan for those early lean income days? One thing you can do in the very
beginning is make sure that you save more money before you invest in a business so that
you have enough cash set aside toward your living expenses until you start earning a
profit from your business. If you are leaving a position with another company to start
your own business and are entitled to any kind of severance package such as unused
vacation or sick time, retirement buyout, or other benefits, put those aside in a special
account in case you need them to assist with personal expenses until your business is
profitable enough to operate on its own.

One option that some people do not even know exists is that of a loan for operating
capital. This means the business owner can borrow money to see him through until the
business becomes self-supporting. Even those who know of this option fail to utilize it
properly by setting their goals too high, being over-confident about the time frame for
building the business to a profitable level, and then have to return to the bank for more
operating capital. This should be included in your business plan, and in order to make
sure that you have set realistic goals, sit down with a financial advisor or accountant in
order to assure that your business plans includes realistic goals for income generation.
Making sure you have all of the working capital you need before you open your business
saves you not only from hours of worry but also save you the potential of having to
prepare another business plan when you require additional funds.

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