Planning for Your New Business

The cost of starting a business is often hidden in the business assets. Even in the least expensive business start-up there are business asset costs – a computer, a router, a desk, chair, headset, two-line telephone – at the very least. As your business grows, your business assets will multiply. Now you have a copier, scanner, printers, more computers, bookcases, credenzas, display cabinets, alarm systems, clocks, servers, racks, digital locks, conference room tables, projectors, white boards, display screens, conference phones – the list never ends.

Don’t let your business growth get away from you. Keep a running list of your assets, the associated costs and the depreciation schedule. Your financial statement should reflect business asset depreciation and you should not forget the valuable write-off of scrapped or broken equipment or business assets.

When you plan for your business, be sure your business planning is thorough and reflects the invested expenses you will incur as you grow – additional employees, facilities, services like cleaning, accounting, legal expenses, human resource assistance, benefits and the like. If you plan for these as you plan your growth, you will not be surprised.  When you talk to your local banker about a business loan, you do not just want to provide the business plan showing your projected growth.  

You want to be sure you can generate the revenue you project with an appropriate and stable foundation. The good news is you may grow to equal and exceed your projections. That can also be bad news if you have not planned for the growth and if you do not have the money to support your business. If you need more people, will your office space accommodate the increase in staff?  

Will you need more supplies, more equipment, or more services? Can you afford these increases on your current budget? Will your increases revenue cover the design and maintenance of the new web site? Sit down now and make a list of the things you will need to grow. Then talk to your accountant and your business banker and be sure your balance sheet supports the growth. With proper planning, you can grow your business, increase your cash flow and come out on the positive side when you prepare your annual financial statement.