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Planning For Every Expense
By: James Calvin
Making a budget for a home business start-up is more of an art than it is a
science. No matter how exactly you think you’ve pinned down all your expenses,
it’s guaranteed that more will appear that you either didn’t think of or just
couldn’t have predicted. That’s why you need to make sure that you always plan
for every possible expense.
Things Break.
Remember that any equipment you buy can go wrong, no matter how expensive or
high-quality it was (this is especially true of anything IT-related!) When
things break, you probably won’t need to buy a new one, but you’ll at least have
to wait for the manufacturer to replace what broke. This can lead to days of
lost or less-efficient business, and cost you money. Budget for equipment
failures.
People are Unpredictable.
When you hire staff, you have no way of knowing that they aren’t going to let
you down. You might have worked out that it takes $200 to train one new staff
member, but what do you do when that newly-trained staff member quits and moves
to France after three weeks at the job? You’ve got no choice but to train
someone else and take the loss. Budget for staff turnover.
The World is Against You.
Or at least it can sometimes feel that way. Just when you’ve got everything
perfect, someone sets up a little construction site next door, and drives your
business away. Or maybe it rains for a few weeks, meaning that there’s just no
demand for your bouncy castle hire business. Whatever, you need to budget for
times when you’ve got no customers – and make sure you have something else to be
getting on with in the meantime.
Customers are Out to Get You.
‘The customer is always right’, right? Well, yes, but their ‘rightness’ can sure
cost you a lot of money. You have to be prepared to take huge losses to pay off
complaining customers. Remember that one unhappy customer can undo hundreds of
dollars worth of marketing efforts – once you make a customer unhappy, your
options are to take a loss fixing the situation or to take an even bigger loss
when they tell everyone how you didn’t. The only way to avoid this expense is to
please all of the people all of the time, which just isn’t possible. Budget for
unhappy customers.
Competitors Kick You When You’re Down.
If one of your competitors spots a good opportunity to take some business from
you, they won’t hesitate. You need to have a ‘war chest’ ready to make
aggressive offers and marketing efforts, and be prepared to get into a
full-scale price and advertising war with the competition. It’s massively
frustrating to be in a position where your rivals are getting all your business
simply because you already used up your marketing money for this month. Budget
for war.
Double Your Budget.
Whatever happens, remember that under-budgeting is the worst mistake you can
make. It’s known as ‘under-capitalisation’, and is generally thought of as one
of the quickest ways to kill a business – anyone who might be willing to give
you finance will just think you’re a fool if you’ve under-capitalised your
business, and might even refuse to lend to you.
Most home businesses budget only a few thousand dollars for their expenses (if
they even make a budget), thinking that they already have everything they need.
People don’t realise how quickly little costs like having some business cards
made or getting your suit dry-cleaned start to add up. This doesn’t apply for
other kinds of business, but if you’re like 99% of home business starters, you
really ought to double your budget. If you doubt me, start adding up all your
‘little’ expenses over a year, and see what happens.
Budgeting for every expense in your initial plans shows that you’re not the kind
of person who thinks that everything’s going to go right for them just because
they’re so great – instead, you’re a practical businessperson who knows that
anything that could go wrong probably will, and you plan to make a profit
anyway. There is a difference, after all, between arrogance and cool-headed
determination, and it’s one that the people with the money want to see.
About the Author:
James Calvin will show you how to market your product to the World using the
only REAL techniques that make the Internet pay off. Go to http://www.MillionaireMarketingManual.com
NOW. You may freely distribute or publish the above article as long as this bio
and an active hyperlink are accompanied with it.
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