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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.
- Winter '09