One of the commonest reasons for failure in business is a lack of financial planning. It is essential to pen down each and every expense that you are expecting in your business. A smart way is to brainstorm all your needs, from tangible goods (such as inventory, equipment and fixtures) to professional services (such as remodeling, advertising and legal work). Now start calculating how much you will need to pay for these goods and services.

First, you will have to come up with an estimate of one time costs to get your doors open and then develop an operating budget for the first year of your business. If you have trouble figuring out how much money you need, do research on other companies in your industry and region of the country. Talk to other business owners about how they figured out start up costs and ask specifically about expenses they forgot.

Take your time with this step, do some price checking and look for legitimate bargains. If you are still doubtful about your projections, in that case overestimate your projections and underestimate your sales. It is a good idea to double your projected start up costs so that you get a realistic number.

Once you are done with your calculations, the next step is to focus on getting your hands on cash. You are of course, aware of the fact that the traditional banks don’t fund start up ventures with minimal cash flow and unproven track records. Well, then what are the other options you can look up to?

An important asset to funding your small business is personal savings. Well, digging into your personal savings will obviously depend upon the life stage you are in. If you are the sole bread earner of a family it is recommended to not use your savings completely and also not be tempted by your retirement savings.

Family and friends can also help you with expenses and thus relieve your financial burden to an extent. Make sure that they are clear that their entire money can go waste and thus it’s always a good idea to take this money as a gift. Of course, you can look at your credit card for help. But be careful as the money drawn from credit card can bring in a lot of stress along with it. Another way to put your hands into cash is to ask for grants from certain organizations such as the National Association for the Self Employed. Their contributions can go a long way in helping you managing your expenses.

Is the thought of a start up frightening? In a way. And yet also in a way encouraging. The very uncertainty of start ups frightens away almost everyone. People overvalue stability – especially the young people, who ironically need it least. And so in starting a start up merely deciding to do it gets you halfway there. After you are done with the basic planning and have found a good funding agent for yourself you are almost there ready to start your own business.

written by REI Circle (www.reicircle.com)