Starting your own business, how to begin

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By JAMES LEAVELLE

It seemed like a good idea at the time…starting your own business that is. After all, how hard could it be? All I have to do is buy or make something and sell it to someone who wants or needs it. Simple. All you had to do was establish a legal business structure, set up an account with the State Comptroller’s office, find a business location, and obtain some financing. You jumped through some hoops to get all that done and now you are in business and you are doing well. Or are you? How do you know?

Many new small business owners never print any kind of financial statement until the end of the year when they have to file a tax return. They have gone 12 months without knowing if they are making a profit or showing a loss. They have been operating in the blind. It’s kind of like flying an airplane with no gauges or windows, except once a year. Operating this way assumes that as long as you are still flying, everything must be good. The problem is that you can’t tell if you’re on course, or if your altitude is sufficient to keep you from running into mountains, or if your speed is sufficient to maintain flight.

Every business should be printing, reviewing, and analyzing their financial reports on a monthly basis. These reports let the business know if they are profitable on a month to month basis. Analysis can show if any expenses are running too high, or if sales are running lower than last year. Reviewing reports on a consistent basis allows the owner to investigate the “why” of everything.

 

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