The illustrations on the following pages are

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Unformatted text preview: cs. Use a start-up worksheet to plan your initial financing. You’ll need this information to set up initial business balances and to estimate start-up expenses, such as legal fees, stationery design, brochures, and others. Don’t underestimate costs. This illustration reproduces a typical Startup table for a home office, service business — in this case a résumé-writing service. The assumptions used in this illustration show how even simple, service-based businesses need some start-up money. Start-up table for a hypothetical home office résumé service. HURDLE: THE BOOK 4.10 ON BUSINESS PLANNING Understand the Risks I’ve spent many years as an entrepreneur and working with entrepreneurs. I understand and sympathize with the urge to create something, to build your own business, and make it work. However, I’ve also seen the disaster of the business start-up that absorbs more money than it should, and optimistic owners who keep dumping more money into a lost cause, digging themselves deeper into a hole instead of getting out of it. The illustrations on the following pages are hypothetical examples of three classic types of start-up companies. There is the successful product-based start-up, the successful service start-up, and the failed product start-up. It shows simple lines indicating the cumulative balance for each business, over time. This cumulative balance stands for how much money is spent or received and how much money is at risk. The actual times and actual amounts, shown in the tables, are not as important as the relative relationship between the examples. Both the successful and the failed product company launches look the same in the beginning. The successful launch turns upward and generates money, but the unsuccessful launch never does. The service company, in contrast, generates less money but also risks less money. This chart comparison makes two extremely important points about the money at risk in different kinds of businesses: • Product businesses usually require more investment than service businesses. • “Bootstrapping...
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This note was uploaded on 01/26/2014 for the course BUINESS 102 taught by Professor Unknown during the Winter '09 term at University of Phoenix.

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