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INTRODUCTION Benny Cenac
There are a few fundamentals that all business must have in order to control as a business. First and most important is the fact that your primary objective is turning a profit. Actually the IRS takes the position that if all you do is continually generate losses they will consider your “business” a hobby and disallow your losses. There not only needs to be a profit motive but a profit generated. This might seem to be like a no-brainer for you but in my 30+ a lot of experience I have seen too many startup create nothing but expenses and there are some good reasons for what We will cover next.
Just before quitting your day job to spread out your 1st business I would recommend checking off on a few items of importance. The first item on your list is to have a product or service that individuals will actually pay for. Not really something you think they will spend on because in the end it will not matter what you think, it’s what “they” think. That’s the plain, simple truth. If you’re not sure regarding it then before you spend a great deal of cash and bankrupt yourself do some testing. Use your circle of friends and family and then their circle of friends and family. It’s important to be able to get individuals who don’t already know, like and trust you to buy. If you possibly can show that without a darkness of a doubt that you have something that will generate income continue reading. If not the remainder of this article is of no value to you.
Once you determine that you have a product or service that will generate income these are the next steps you need to take and why:
1: Make a monthly personal price budget.
You need to determine how much you need to generate in distributions from your business to meet your each month outlay. Unless you are already out of work without other income options you may need to keep paying your bills. Don’t just quit your job until you have at least a year’s worth of savings to carry you through.
The reason for this is the reality without a cushion you can feel the stress of having to generate profits. Pressure clouds our judgement and drains our energy. You always need to be in tip-top condition in your mind and physically. You’re heading to have enough disturbances and obstacles to start with and don’t need to add any personal imposed burdens on yourself. Additionally, knowing what you will need is 1, 000 times better that operating in the dark. Knowing your details is essential if you need to run a prosperous enterprise.
About the next page is a simple worksheet to help you determine your monthly nut. Don’t make the mistake of omitting things like meals and entertainment, vacations, holidays, birthday parties and the all important surprises that are sure to occur like car and home repairs. For those who have children leave a nice big fudge factor. This kind of is merely your expenses, not earnings and not even broken from a month to month basis. It’s an approximation so don’t get into pointless details. Keep it simple!