Financial Requirements
You'll have to spend money to make money

Once you've decided on a business, you have to determine what it's going to cost to run and maintain over time. Be sure you have enough money to:

• Purchase office supplies and equipment
• Purchase computer equipment and software
  (if required.)
• Buy products and materials you'll be selling
• Advertise your business and services
• Buy health insurance coverage for you and your family. (Group coverage for the self-employed may work for you.)

You must also be certain that:

• You have a cushion in case of an emergency, or to tide you over until business picks up
• Your home business is not your only source of income unless you're sure that you can exist on only 50 percent of your anticipated sales
• The money you are planning to invest in the business is not money that you need to personally survive
• You ca get another job as good as the one you're leaving should this venture not work.

Determine as accurately as possible how much money you need to start work:

• Work out a detailed one-month, cost-of-living budget and multiply it by four
• Then add in the estimated expense of starting the business, including initial operating capital. The result is approximately how much cash you should have on hand to carry you through start-up period.
• You'll also need to make a careful projection of your monthly cash needs for the first three to six years, and compare that to your revenue estimates, adjusted for any seasonal sales fluctuations and expense factors such as insurance or tax payments. This should help you identify potential low points, and give you an idea of how large a reserve you'll need to carry you through.

Click HERE to print a copy of a Cash Flow Worksheet to help you get organized.

You should begin your venture spending the least amount of money possible, but be prepared to spend more as your business grows.

After you've considered your monetary requirements,
you should begin thinking about a financial plan.

Develop A Financial Plan >>

Financial Plan