Successful start ups don’t need budgets, correct?

When looking at the factors which go towards a successful start-up, the importance of a solid vision cannot be underestimated. This enables you, the entrepreneur, to see what resources are required and when.

OK, so you now have a crystal clear picture of what you want to achieve and by when. Fine. It will cost roughly whatever. That can be financed by a bank loan or an investor. Time to start making the phone calls, no?

It’s a that stage you receive an annoying reality check from your spouse. “Honey, shouldn’t you draw up a budget?” And we all know the response. “Oh gee, thanks for your concern (newspeak for ‘keep out of it’), but I am only a start-up. Those excel spreadsheets are not for me.”

Wrong! But why? Because we all need a budget, whether you are a 10 year old kid, stretching your pocket money to the last sweet, or if you are about to invest your savings in an untried project.

A budget is like as a vision. It forces you to think.

When initiated properly, it encourages you to admit exactly what you need and how much the project will cost. In parallel, on the revenue side, you will be forced to justify your market model. Not a pleasant process, but very necessary.

And if you think that exercise was painful enough, get this. Imagine that you have finally spent days on your spreadsheets. You produce some positive figures, which are checked by your ever-supportive spouse. You are relieved and are about to pour a celebratory glass of wine, when you hear a tentative voice from the computer room: “Your cash flow is negative.”

“What’s that? How can it be if my budget looks sound?” you scream, as your glass narrowly misses the laptop. “And anyway, why do I need a cash flow, if I have a budget?”

It’s not back to square one, but more financial thought is demanded, and rightly so.

If you want some tips on cash flow, I suggest you look at this management blog. For future entrepreneurs, I have been asked by WritePoint to conduct a course on “how to start-up a successful business”. For further details, contact Chaya on 02 5716668 or see http://writepoint.com/blog/?p=961

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