Planning and Procedures for Business Start-Ups

Starting a business is a process that requires much planning. A business plan should be made mapping the future business.

Starting a business includes many steps that will be explained. The first step in a business plan is deciding the nature of the business. A detailed description of products and services is the first part of a business plan. For a fishing shop, for instance, the products would be all the fishing rods and accessories.

In addition to a detailed description of products, a detailed description of services must also be made. The owners must decide where or not there will be a service department with the fishing shop.

The next part in figuring the nature of the business is to decide the estimated risk. The risk of the business is based on the analysis of the industry. To analyze the industry one should take several considerations into thought. For example, how much demand for the business there will be in the area, as well as, how other businesses of the same nature have done in the area.

Size and location of the business are also required to figure the nature of the business. The size of the business can be based on the capital available, the demand in the location, as well as any other factor that might affect the business. Location is based on many of the same factors.

The second step of a business plan is to plan the goals and objectives of the business. This step requires thinking about what the short-term and long-term goals will be. In addition to the short-term and long-term goals, the owners must express the expected results in sales volume and profits.

These goals and objectives should be based on the amount of capital invested and the amount of the loan. The business must plan to make a profit, however, the profit does not have to be immediate. It may take a little while for the business to become established in order to make a profit.

The long-term plan of the business might take all this into account. A marketing plan is the next step of a business plan. A marketing plan takes into account customers and their demand for the fishing rods, accessories, and services. A marketing plan should also include prices for the products and services, and a comparison of products and services with competitors in the area.

The prices should be figured based on the supply and demand theory. If there is a large demand and no other competitors in the area your prices can be much higher than if there is little demand for you products or services, or if there are several other competitors in the area.

The business plan is essential in the formation of any business. In addition to the business plan a list financial institutions which to apply for a loan should be assembled, as well as, hiring a lawyer to help in the formation of the business. Proper planning might take a long time but in the end it will make the process of starting a business much easier.

More resources on business startups
Business start up Starting business in the USA

Positive Cashflow!

Having a positive cash flow is an essential step in gaining financial freedom. I did not realize it at first. It was only after I have read the Rich Dad's series by Robert Kiyosaki that I have realized the importance of maintaining a regular cash flow and expenses that does not exceed it. I have to ensure that this positive cash flow not only comes consistently, it should be increasing.

Basically, there is two ways to increase the positive cash flow. The first way is to earn more and maintain the existing expenditure. The second way is to reduce wastage. Usually, a combination of both methods can be used to achieve a better positive cash flow.

For example, I am currently earning $3000 per month. My monthly expenditure is $2500. Since my income is more than my expenditure, I am deemed to have a positive cash flow of $500. If I want to increase my cash using the first method, I can take up another part time job or assignment to earn an extra $500 per month. As a result, my positive cash flow has increase from $500 to $1000.

If I am using the second method, then I will be examine my existing list of expenses to identify which ones are unnecessary or redundant and do away with them. In other words, I am reducing wastage in my existing expenditure.

For example, I am currently subscribing to a particular magazine. I wanted to read the magazine but I never seem to have time to read it. So the weekly issues of the magazine just keep piling up untouched. That is I am wasting my subscription fee altogether. When it is time for renewal of subscription, I should simply stop the subscription altogether and save the money. However if I am not aware of my wastage, I will simply renew the subscription thinking that I will find time to read the magazine.

My expenses can be classified into fixed and variable. As its name implies, fixed expenses are those that I have to consistently pay every month like my loans and mortgages. My variable expenses are expenses that are not consistent, like entertainment, food, vacation, clothes and such. Wastage is usually found in the variable expenses.

Reducing wastage is quite different from bad spending habit. Bad spending habit is a habit of spending on unnecessary things even though I am aware of it.

For example, when I see a shop that is on sale, I will go and spend money simply because there is a sale. I know that these products or services are not necessary but I do not care because I cannot control my urge to spend. I simply have a habit of spending on seeing a sale sign.

By reducing wastage or increase income, I will be able to gain more positive cash flow. Yes, I can invest my excessive cash due to positive cash flow in assets that generate passive income as learned from the Rich Dad's series by Robert Kiyosaki. But before I do any investment, it is important that a few fundamental things are handled first.

Firstly, I will save the excess cash as emergency funds. Based on my understanding of personal financial planning, I should have an emergency fund equivalent to 3 to 6 months of my monthly expenditure. In case of any emergency that cause me to lose my income, I can still survive based on my emergency cash for 3 to 6 months. In the meantime, I can look for an alternative source of income.

Secondly, I will use the money to insure myself again risks. Insurances such as life insurance, personal accident insurance, medical insurance and so on should be used to manage the risk of great financial losses due to unforeseen circumstances.

For examples, if I have an accident and I do not have any personal accidental insurance, then I may end up paying a heavy sum of medical fees due to injuries. If I become sick and I do not have any medical insurance to cover me, I will end up paying a large amount of medical fees.

When the above two things are done, then I will consider investment provided that I do not have any existing liability. If there is any existing liability, then I will need to judge whether it is wiser to pay off my liability first or use the money for investment. As a thumb of rule, if I cannot guarantee the rate of return for my investments is more than the loan repayment interest amount, then I will be better off by paying for my debts.

Max Ng helps people who desire success to learn from his mistakes and realizations by sharing his personal struggle for success at www.richdadsecrets4me.com. He is the author of "Your Greatest Gift! Why Waste It?" at www.yourgreatestgift.com