When you wrote your business plan, did you remember this important component of business success?
Many new entrepreneurs spend a lot of time planning their business. They do this to ensure that once their doors are open things run smooth and that they have a real chance for long-term success.
Most go out and write a business plan. Business plans are great tools in planning your business as well as thinking through all of the small things that business owners have to deal with each and every day. They are very good road maps for a business owner.
But, there is one thing that almost all new business owners miss – and that is their personal situation. They miss it because they get so engrossed in planning the business side. Further, most business plan templates or software just do not cover this issue.
To be a successful entrepreneur, a business owner needs to have the least amount of disruptions (non-business disruptions) possible as well as have the ability to take advance of all opportunities that come their way.
This requires a very solid personal foundation. An entrepreneur must first be mentally ready to put in long hours, make hard decisions and choices and be willing to do what it takes to succeed (take risks). They must also be willing to make personal sacrifices for the business knowing that these scarifies will pay off in the long-term. And, lastly (and most importantly) they must be financially prepared.
This can mean:
1) Having your personal finances in place so you are not reliant on the business to cover your living expenses. Most businesses take 12 to 18 months just to break even. If the business owner is counting on the business to provide them a salary from day one – they are setting themselves up for a quick failure.
2) Reducing personal obligations to the lowest level possible by either consolidating debt into one low monthly payment or eliminating personal debt altogether.
3) Lowering living expenses to the most basic of needs. Luxury items are out – stick to just the basics for survival.
4) Improving credit scores. Regardless of what you may have been told – your personal credit history really, really matters. Should you need working capital or some other type of loan for your business – your personal credit history will come into play. Should you need trade credit or store credit or even insurance – your personal credit history comes into play.
By making yourself as lean as possible – reducing personal distractions and putting yourself into a position to jump at every opportunity – will go a long way towards your business success.
Every day I come across entrepreneurs who either have great ideas or growing businesses but cannot get them to the next level because their personal situation (bad credit or personal money needs) stands in their way.
Don’t be one of them.
Copyright 2009 – BusinessMoneyToday.com