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Getting the numbers right definitely gives your business a boost

Starting your own business is one of the things that we all dream to do one day. Often, when things are not working with the boss at work it is easy to get lost in thoughts of how all this would come to an end one day, when you finally kick start operations of your own. It definitely pays to be your own boss. You can afford to be flexible with your time, and conditions such as depression and other work related stress may actually subside. This does not mean that you have to become lazy – because without hard work, the enterprise will simply collapse. If you figure that you will be coming into the office at noon because you are now running the show, then probably your employees will open the doors at eleven-thirty, just before you come in.

The importance of hard work, therefore cannot be overemphasized. Apart from that, the risks are much higher working for yourself than in that old, tried and tested organization that you used to work for. Chances are high that income in the next few months or even years would not be as regular. It will not be a stroll in the park. In those times of infancy, it is probably clever to cut spending on several things, and spend adequate time planning how to manage your finances and cash flow. One definitely needs a financial projections business plan, over and above the operational, marketing and recruitment documents that you would obviously have for the company. If you have a solid accounting and corporate finance background, you would probably be able to produce a good one for the business.

Without it, chances are high that you end caught up in the web of insolvency sooner or later. As a new entity, not many investors and/or financial institutions are always prepared to pour some funds into the business therefore one needs to ensure that the revenue that is received is allocated sparingly, ensuring that there is a buffer that is created so that the business can have a soft landing during off season, for example. Cash management models for a business startup in excel are good resources that can be utilised to map the future financially. They are pre-populated with formulas and are highly user friendly, enabling you to understand the consequences of different actions or strategies. You can make certain assumptions about demand, changes in the prices of raw materials or delays in supply, and then project the performance of the business using these models in an excel sheet. Additionally, you may be able to calculate the break-even point in quantity or in sales revenue, as well as the margin of safety. There are thus, clear benefits that would be obtained from owning a system that can give reliable estimates of the future. The estimates will nevertheless deviate from the actual performance but they are the closest that you can get to reality and a small margin of error should not be too detrimental to the business.

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