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Financial Feasibility
A major reason for small business failure is an inadequate level of funding. As such, it is essential when planning to start a business that you have a clear and complete understanding of your financial resources. Otherwise, it will be virtually impossible to accurately determine the financial feasibility of your proposed business start-up.
Household Budget
A good first step is a review of your household budget. Ask yourself the following questions.
What is your household budget?
How much money do you need to maintain your lifestyle?
Will the business you propose to start financially fit your budget and lifestyle?
Do you have a source of income until the new business starts to make money?
If you plan on leaving a job to start the business, what salary do you need to make in the new business to pay your current living expenses?
Funding the Start-Up
Whether you are able to provide some or all of the money to start your business or will need to obtain capital from other sources, there are specific questions you should ask yourself—and documents you will need to produce. Such as:
What will it cost to start or purchase your business?
How will you fund it? If seeking funds from outside you or your family, do you have a relationship with a lending institution? Or a possible investor?
What is your current credit standing? Do you know your credit score? Have you recently reviewed your credit history?
When starting the conversation about financing, have these basic items on hand:
Personal Financial Statement (joint with spouse)
Complete Copies of Personal
Federal Tax Returns—previous three years is best
Resumes of the Business
Principals
Personal Credit Reports for the
Principals
