top of page

Properly capitalized

It takes money to make money. That isn’t the first time you have read that.

Sometimes, when a person opens a business, he or she scrapes up as much money as they can to make their new business endeavor a reality.

Oftentimes, that involves credit cards, HELO, 20K borrowed form Aunt Janet, etc.

The amount they come up with covers the first month’s rent, last month's deposit, enough to buy inventory, maybe make a hire or two….but not enough to cover 12 months expenses factoring in lower revenue the first year than any other year after that.

In other words, they need to be profitable month one…..month two at the latest….or else?

Or else what?

Or else they can’t keep the business going and they are forced to close.

The number one reason small businesses fail in their first year or two: Under capitalization.

We’ve all heard stories about the guy or gal who started a business with 3000$ on a credit card. Or the person who double mortgaged their home.

These stories are true, there are people who made their dream happen with some shoestrings and duct tape.

But for every story like theirs, there are 14 other stories about John or Jane ending up in bankruptcy court.

Listen, opening a business and turning a profit is tough. But it’s damn near impossible unless you have realistic expectations about revenue growth.

It’s one of the reasons why going with a franchise is smart. Industry expertise, track records, proformas, a lot of strategizing for you, to help you understand the landscape ahead.

Whether you go it alone or as part of a brand, please take your time to figure out a way to make sure you have enough money to make this work. We all want success overnight and are willing to do what it takes to make that happen.

But sometimes, we also need a little bit of time as well.

2 views0 comments
bottom of page