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Starting up your own business – a budget is pure gold

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lunch on a budget at the world famous Japadog stand in downtown Vancouver

by Gary Weigh Business Coach Mentor

Before you actually start up your own business and embark on your business strategy implementation, I want to talk about the incredible value of creating a budget for your proposed venture.

Let’s say that you sell a line of home-made jewellery at $20 a piece and your gross profit percentage is 45%. That means for every item sold, you will have $9.00 left over after paying the cost price ($11.00) to buy or make that item.

If you sell 20 items in a day, your total sales for the day will be $400. The cost to buy or make those 20 items will be $220 (i.e. $11 x 20), and you will have $180 (i.e. $9 x 20) left over to pay for all your other business costs – i.e. your overheads. In simple terms, your overheads are those expenses that don’t relate directly to the buying or making of your product; but they are necessary to run your business.

If you didn’t have any overheads, then the $180 per day (calculated above) would be your profit. But of course, you will have other expenses to pay. Even if you work from home, you will have telephone, internet and other communication costs. You will probably have some stationary and some promotion / advertising costs. It is also likely that you will incur part of the cost of running a car. And don’t forget that your own time and labour is not free. You must pay yourself just as you pay other people.

These are just a few typical expenses, but if they happen to average out at $180 per day, then you will not make any profit. (Think of profit as your investment or entrepreneurial return for taking a risk). In fact, you will be at your breakeven point – no profit, no loss! From here you can make a profit (or increase profit) by:
• Increasing the number of sales you make each day
• Increasing the price of each item (but that might result in less sales)
• Buying or making the jewellery at a cheaper cost price
• Cutting back on your overhead expenses.

So before you begin starting up your own business, you can gain some idea of revenue, direct product costs, overhead expenses and likely profit. It is called a Business Operating Budget, because it relates to the ongoing business operation.

Before you get to business strategy implementation (the operating stage) you will firstly need to spend some money to set up your business (e.g. fit-out, furniture, equipment and website). You can create a budget for this too. It is called a Business Setup Budget.

Keep your two budgets separate so you don’t mix one-off set up purchases (e.g. office furniture) with regular ongoing operating expenses (e.g. monthly phone bill).

By setting all of this on a spreadsheet (e.g. Microsoft Office Excel), you can change the important variables and test the result (on paper at least). You can try various levels of price, volume, product cost and overheads. This is called ‘What if’ analysis. By doing this, you can create a business with a level of spending and a bottom line to suit your purse. It’s part of planning your own business.

If you seek startup advice or a powerful online business presence when starting up your own business visit http://garyweigh.com/business-startup

Until next time!

Gary

Top small business ideas – business storytelling

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Make sure that you're still telling the same business story when it is translated into English

by Gary Weigh Business Coach Mentor

As you plan your business strategy implementation, remember the magic of stories. Business storytelling ranks up there with the top small business ideas. Stories build families and communities. They build emotional connections and it is well known that people buy largely on emotion rather than logic. Stories build faith but only if the story becomes real for the listener personally. Once people make your story their story, you have tapped into the powerful force of faith.

Can you remember when you were a child and one of your parents read you a story at bed time. Remember how it fired your interest and imagination. In business, a good story is more valuable than a thousand words of information and techno-babble.

When Anita Roddick, founder of The Body Shop, was asked why she chose skin care, she replied: “Because it’s storytelling. In every group I have spent time with, women will always corral around a well and tell stories about the body, birth, marriage and death. Men only have conversations or memories about their first shave. But women will always use the body as a canvas, a playground. ”

Traditionally, good stories become better in the retelling. It is the stuff that myth and legend is made of. The Anita Roddick story (below) is a great example. Although she died in 2007, her legend lives on. That is why leaders and successful merchants tell stories. They know that stories captivate attention and allow the listener to connect on an emotional level. Stories are remembered forever, whereas information is largely forgotten by the end of the day.

People, with whom you have made a story connection, become more relaxed, more interested in what you have to say, and have fewer objections. There is a much greater chance that your audience will reach the same conclusions as you and enlist in your cause. In other words, they like you and trust you and have concluded that they will buy from you.

There are many types of stories that you can tell to get your business message across. For example, your business storytelling can be about your self and your journey, the origin of your innovative product line, or you can share your vision and values. Make it an integral part of your business strategy implementation. But please – make it short; make it interesting and, above all, make it honest. Oh and one last thing – don’t let your inner demons tell the story unless you can also tell the story of how you overcame them.

For more top small business ideas visit Gary Weigh, Business Coach Mentor at http://www.garyweigh.com

Until next time!

Gary