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It's business planning that might seem like a no brainer, and worth skipping at first glance, but there are many make or break details to be uncovered as you think through this section that can save you from headaches down the road.
How much do you need to make to cover your cost of living?
Consider this as you plan your pricing, determine your target markets, and decide on your marketing and sales strategies.
What will it cost you to get new equipment and materials together to actually launch your business?
You might already have some equipment that you’ve recorded in assets, but do you need office supplies or Many of these costs will be determined by the services you decide to offer, and vice versa. You want to think through the following questions to narrow down where you fit in the market, and who you want to target for business: At the end of the day, a healthy profit is what’s going to keep you in business, otherwise you’ll be losing money or merely breaking even.
Determining the cost of labor and materials is straightforward, but working with a bookkeeper or accountant is the best way to ensure that you’re charging enough to cover your overhead expenses (indirect business costs such as advertising, equipment maintenance, office rentals, etc.) and also creating a healthy profit in line with your business goals.
For example, if your goal is to service multiple markets then you need to price accordingly to save money for extra equipment, personnel, etc.Before you go out and buy new equipment, list all of the various materials you need to run your business and indicate if you have them in your possession already.Using what you’ve already got will go a long way to keep your startup costs down.For example, if you can’t afford an aerator at the time you launch your business, then you won’t be offering aeration as a service. Profit needs to be the focus when determining your pricing, but it’s not 100 per cent about your bottom line.To make the most of your pricing opportunity, you also need to think about the value you’re offering to customers.If you’re the only employee, how many jobs can you do per day, and how much do you need to make from each job.You may decide that certain jobs don’t make enough money for you to focus on selling those services.You can project these incoming and outgoing costs for the next year, and if you want to take it a step further, you can think about what you’d like that projection to look like in two years, three years, etc.Financial plans help you to set goals and ensure that you’re growing your business.Perform your day-to-day work without a plan, and you run the risk of not noticing that you’re only breaking even or that your business is slowly stalling (in which case a business plan can help you get back on track).A business plan is a great exercise to get you thinking about the bigger picture from the start, and it’s a way of setting a more solid course if you’re already running your business.