The Money Pit

stop-losing-money

I spent last Friday at the GrowthCLUB put on by ActionCoach. During the day the group of business owners who had assembled for this workshop completed their 90 Day Plans for the next quarter.

That gave me the opportunity to see where we have come over the last quarter and where we want to go next quarter.

So why is this important? For many business owners they have approached their business for too long as an expensive hobby and not a business.

That’s when you have a money pit. Dictionary.com defines a money pit as “any entity or venture which requires much money for maintenance and drains financial resources.”

Sound familiar. It did to me. Over the past few years I have started in several business ventures. Some of them were good, but, many were not so good. I have had a Money Pit or two in my lifetime.

When starting a business there are a lot of things that need to happen before you open your doors to your customers and most of these cost money.

1. Do your research.
Will your choice of business support you’re financial and emotion needs? Who are your customers? Who are your competitors? What makes you different from them? Is there a need for your product or service? Where will you get your products from? Do you have enough cash to fund your venture or will you need to get investors? There is a lot of research that needs to be done before you put any cash into your business. I like to practice the 6 P’s when I am thinking about a business venture. The 6 Ps are Pre-Planning Prevents Piss Poor Performance. It pays off in the long run to do your research before you move to the next step.

2. Get your finances in order.
You need to have enough cash on hand to be able to live off of and operate your business for a period of at least one year. You need to look at creating a budget for your personal life as well as your professional life. One of the best ideas to help me keep my spending under control was to carry a small notebook where I would record every penny I spent. This included when I sat down and wrote out checks for bills. I was able to save thousands of dollars by looking at each item I was paying for and determine if it was absolutely necessary for me to have it.

3. Know your limits.
You may think you are the expert at your hobby, but it’s not important what you think, it’s important what your customers think. Be realistic about your expertise. You need to know what makes you qualified to be the expert. You also need to surround yourself with the best collaborative partners out there to take your hobby to a successful business.

4. Create a business plan.
A business plan will allow you to look at all aspects of your business before you put any money into it. A good business plan will include short term and long term goals. Will you need to stock products? What kind of business you’ll have; brick and mortar, or virtual. What will be involved in the day to day operations of the business? What is your target market? Who are your business alliances? Who will be your vendors? What equipment will you need to run the business? What are your expectations for the business? How will you know when you break even?

5. Share your idea.
Once you have your business plan it is time to go out and solicit feedback from those you know and trust. Often what you think is a good idea may not be a profitable one. Seek advice from others in business and the local small business administration.

6. Market yourself and your company.
You are the face of your company. You need to be the leader and establish the relationships that will take your business to the next level. Remember that you can’t take back a first impression so make it a good one.

7. Take it to the streets.
Get involved in your local community and make yourself available to worthy causes in areas you are passionate about.

8. Get digital.
In today’s Digital Age you need to have a presence on the web. Get involved on Facebook, LinkedIn, Twitter, Google+, Pinterest, and YouTube and let your story be told. Get an online presence and take your business viral.
By following the eight steps outlined above you will soon be able to take your business from the money pit stage to a thriving, profitable business that will bring you more satisfaction than you will ever get by working for someone else.

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Gary Patton

Chief Connecting Officer at On Purpose Leadership
An Accomplished Business Consultant with over twenty-five years of experience in sales, management, training, and operations, Gary has worked with over 2,000 businesses to design and implement solutions to significantly increase their market share, customer service, revenue, and profitability.
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