Most folks think getting product to market is first order of business for start ups. However, actually cash-flow management is the number one priority which small business owners and start ups should focus almost all their efforts on before selling their first product or service.
The Small Business Administration estimates that start up costs for operating a business range between $3,000 and $30,000 depending on the type product, industry, manufacturing involved or whether it’s a franchise you’re buying. (Ewing Marion Kauffman Foundation study, 2009).
You see, before taking a product to market a lot of investigation should go into it prior to it even being launched. Yes! That’s right. Not all products that are developed should immediately be put on the market. In many instances a prototype needs to be developed, suppliers secured and depending on the product…financial backers secured.
Translated into the creative class that means before publishing your book, selling your first framed work or art or going on your first music tour you should run the numbers. That means you crunch the numbers to see if it’s viable for your business is sustainable from 1-5 years. Ideally it should be sustainable for you to cover all your business and personal expenses.
With that said, any small business should start with a plan for cash-flow management for not only the business, but also taking into consideration all the other living expenses. It boils down to basic needs including food, water and housing. In today’s terms that is most likely rent, electricity, water, food and Wifi. If you’re married and have children or pets, there are those expenses too plus healthcare. That really adds up fast.
Stay tuned as I’ll be writing a series of articles that focus on cash flow management and some simple ways and things you can use to keep your costs down.
Do you have any tips you’d like to add that would be helpful for other creative entrepreneurs? If so, let me know! I’d love to share them.
