Have you always dreamed of owning your own business and have now decided to take the plunge? If so, you are no doubt overwhelmed with a myriad of details and decisions. After developing your product or service, its delivery, identified your target market and developed a marketing plan, the issues of operations and finance still remain. While no one can be an expert at everything, there are some basic business fundamentals with which every small business owner should familiarize themselves.
Whether you are well capitalized to start your business or intend on maxing out your credit cards, knowing costs is critical. Omitting this step has proven to be the death of many small businesses. Identify your fixed costs – leases, utilities, insurance, employee costs, etc. Identify your production costs – cost of labor, materials and production. Once costs have been confirmed, pricing can begin. If you undersell your operating costs to gain business, you’ll rapidly find your business in the red. Identify the prices that the market will bear for your product or service and align your costs accordingly to maximize profitability.
Reducing and eliminating costs are two moves that will allow you to lower pricing without sacrificing profits. Consider taking advantage of the awesome deals offered by Groupon coupons and use a free, third party payment system such as Vimeo to reduce excessive bank charges. Enlist the help of interns from local business schools to maintain data bases and route customer requests. Get creative. At the launch of a small business, owners short on capitalization often devise ways to barter with vendors and suppliers. Taking these measures are often necessary for the launch of a successful business.
Finally, resist the temptation to realize profits from your growing company. Every dollar reinvested will compound in multiple ways towards growing your business. Keep very clear records of all expenses and commitments. You’ll need these for taxes as well as forecasting. Enlist the assistance of the local small business development center. These organizations often provide mentors which can prove to be an invaluable resource. Good luck to you!