Avant Labs The Ultimate Business Guide

You're ready to start your own business. It's something you've been dreaming about for a long time. You're tired of working 9-5 and everything that goes with it- idiot bosses and coworkers, fighting traffic five days a week, climbing the corporate ladder at a snail's pace, and so forth. You're ready to live your dream. The problem is- how do you go about starting your business? Where do you go to form your business? How do you develop a brand name?

How do you even know what product or service to sell? What about the money and time necessary that goes into all of this business stuff? There are so many questions and potential hurdles.

Starting your own business is at the same time an exciting and daunting prospect. On the one hand, the benefits sound absolutely terrific- doing what you love to do (either the business itself or at some point later on with enough money), getting out of the 9-5 routine, being your own boss, setting your own work schedule, and hopefully, generating more cash flow than you've ever had before. On the other hand, though, the monetary, time, and informational barriers to entry can be substantial and frightening. After all, where are you going to get the money, the time, and most important of all, the information you need to start your own business?

Yes, that's right. The most important thing of all for starting and running your own business is information. That sounds strange, especially in light of some of the more common excuses people have for not starting their own business, such as "I don't have the time.", "I don't have the money.", or variations thereof. Most of the time, however, upon closer inspection, it's not so much a lack of time or money that is the problem- it's a lack of information. While money and time are indeed problems for sure, they are often not the insurmountable mountains that they first appear to be when you have the appropriate information and resources. For example, if you were aware of much cheaper options than going to an expensive lawyer to legally form your business, if you knew how to outsource the manufacturing of your product, or if you knew how to effectively promote your product to your target audience with very little expense, you would save a tremendous amount of money and time. And these are just a few of many, many extremely helpful pieces of information contained in this guide. After reading the entire thing, I think you'll find that you are armed with a wealth of information that will greatly reduce the money and time needed to start and run your own successful business. You'll be well on your way to achieving your dream.

Financial forecasting is the act of predicting what the future income statements of your business might look like. Essentially, financial forecasting involves using what we know and what we assume about both revenue and costs to see how the future bottom line of your business might be affected. For example, we might make assumptions about the price of your product, the cost of your product, the cost of rent, the cost of utilities, and so forth, to see how net income would be affected in a situation where those assumptions came to fruition. It should go without saying, but forecasting can be a very tricky thing. After all, forecasting is attempting to predict what the future might hold based on what we currently know and assume. And since we don't know everything and assumptions can sometimes be way off, we can't predict precisely what the future holds on every occasion. Think about weather forecasts, for example. Sure, oftentimes meteorologists predict the weather correctly, but sometimes they don't. That's just the nature of forecasting. Still, financial forecasting remains a useful tool to see how things might play out in all sorts of different scenarios, including the worst-case and best-case scenarios. If you know at least some of the possible scenarios that your business might find itself in you can do your best to prepare for them.

There are several different techniques you could employ to forecast the future finances of your business. For example, you could use linear regression to predict the expected increases in sales given different levels of marketing expenditures. You could also spend money for advanced versions of Quick Books® (http://quickbooks.intuit.com/) that have forecasting features. However, for the sake of ease, simplicity, and cost, you can just construct templates in Microsoft Excel to predict what future income statements may look like. It's not as bad as you might think.

Recall from the Marketing chapter that this is the same technique you should use to help predict revenue and costs of an idea in the Business Analysis step of the New Product Development Process. The usefulness of this technique doesn't stop there, though. You should also use this technique whenever there's any change to a price or cost, or even when you're just thinking about making any changes, to see how it might affect the overall financial picture of your business.

Now, let's go through an example of how to construct a financial forecasting template. We'll break it down step-by-step with a simple example of selling one product. This may not make sense to you as you do it but it will be worth it in the end when it's fully functional. Follow each step carefully.