Many people assume that when you have your own business you will make a lot of money. Generally in small business, you will need to work a lot harder than if you were an employee. Let us have a look at a general scenario.
You start with an idea and you think it will work and provide you with the livelihood. First of all, the idea needs a lot of fine-tuning. Let us say that this idea of yours is something that is within your scope of expertise. This is a very good start because going outside your area of expertise, is fraught with danger. The new idea needs to have a thorough business plan! You may think this is unnecessary but experience tells us otherwise.
A business plan will make you think through the entire operation. The business plan comprises the idea and concept which is expanded into a detailed system of operation in how the business will actually work. The business plan also comprises the estimated cash flow which is the money coming in and how it is going to be spent.
You may do up a wonderful business plan, but you need to have working capital behind you, either through savings or borrowings. Generally speaking, banks and other lending institutions will not lend without real estate security to a new business that has not been operating for at least 2 years and has shown good figures. The banks are not stupid and they have learned often from experience that small businesses fail, often through lack of financial backing and careful management. They have also learned that many great idea is wasted because people have not thought through the consequences of that cash flow or lack of.
