There Is No Perfect Time To Start Your Company

In my effort to always provide a steady stream of useful information to entrepreneurs and aspiring entrepreneurs, I post tons of interesting and helpful articles that I find around the web that I think can help answer questions for my followers and help you all move your businesses forward. Oftentimes, people write me asking to elaborate on those articles or pieces of those articles so I am starting a series that will do just that. I may combine a few or leave a few out here and there, but I will cover the topics that people most often asked me to elaborate on.

To kick things off, I recently posted an article from RockthePost about common misconceptions people have about launching a new company. The first of those misconceptions that I want to tackle here is the idea that you need to wait for the perfect time to launch your company.

A lot of first-time entrepreneurs are perfectionists. They’re still used to being over-achievers in their regular jobs and they’re a little anxious about going out on their own, so they want everything to be absolutely perfect. They hold off until they can find the perfect idea, build the perfect team, create the perfect website and marketing materials, have the perfect financial foundation, and on, and on, and on. We all know that it’s impossible to achieve perfection, however, so this becomes a way for aspiring entrepreneurs to avoid taking the risk and actually building their business.

There will never be the perfect time to start your business just like there is never really a perfect time to have a child. It’s going to turn your world inside out no matter when you jump in and do it, so don’t obsess about the perfect launch so much that that launch day never arrives.

Now, don’t get me wrong: I’m certainly not arguing that you should ignore all planning, brush aside major warning signs, and launch without any proper preparation, but at some point you have to realize the perfect time to launch will never come, cut off your planning, and go.

So how do you tell if you’re responsibly and strategically developing a launch plan that happens to be a bit in the future or if you’re just stalling because you’re scared or obsessive? Ask yourself the following question:

  • Are you re-doing the same work and the same analyses over and over? If you’ve already created a complete business plan and have a strategy for launch but you just keep doing the same work over and over again to make sure (for the 127th time) that your calculations make sense, you probably need to cut yourself off and launch.
  • Is your analysis based on research? If you pulled all of the numbers for your pro forma financials out of thin air and you “guesstimated” on costs, revenues, growth rates, etc. then you need to dig a bit deeper and do some real planning. If you’ve done extensive market research, however, and you can justify where every number in your financial projections comes from and they’re still showing that you should achieve profitability, then it’s probably time to get started.
  • Are you waiting for an impossible aligning of the stars? There are times when putting off a launch for a few months makes absolute sense. If your business is seasonal and you need to launch at the appropriate time of year or if there is going to be a change in regulation that will affect your ability to do business and you need to wait for it to kick in, then you should absolutely wait for the “right” time to launch. However, if you’re waiting for a 70 degree day with no clouds in the sky, that also happens to be on a Wednesday, the date is one of your lucky numbers, and there will be a complete solar eclipse, you need to get over it and launch.

I think you can see the pattern to these questions you need to ask yourself so I won’t blab on and on about it. As you can see, they key is to avoid both extremes of over-planning as a means of procrastination and jumping in before you have any idea if you can swim or not. I’ve actually talked about this quite a bit before and have mentioned it in more than one interview. I see so many entrepreneurs who fall into one of two categories: either they do absolutely zero planning and just launch believing they can hustle their way to success OR they plan obsessively to the exclusion of taking any real action. Neither of these is going to lead to lasting success for your business, so you have to find the balance between planning and action.

Once you find that balance, you’ll realize that there is no perfect time to launch your business and begin taking steps forward now.

 

Now I’d like to hear from you: Have you ever obsessed over the perfect time to start your business so much so that you never actually got it off the ground? Do you have tips to help others stop obsessing and move forward? Let us know what has and hasn’t worked for you in the comments section below. 

And remember, the conversation is always better the more people are involved so please spread the word. If you found this video helpful or think someone you know could benefit from the information, please like it, share it on social media, and email the link to your friends and colleagues to get some good karma.

The Basics of Cash Flow Analysis for Startups and Small Businesses

Everyone’s heard the refrain “cash is king” when it comes to running a small business and it certainly can be true. There are many new or small companies that are profitable but are still forced to close their doors because they didn’t manage their cash flow appropriately. That’s why careful cashflow analysis is incredibly important when you’re running a business.

Cash flow analysis is basically keeping track of when and how cash flows into or out of your business. This is different than just tracking your revenues and expenses because revenues and expenses should be tracked based on when money is earned or spent, not when it’s actually received or paid out. Depending on your business, your clients may not pay you for up to a couple of months after you’ve already delivered a service or product, so you have technically earned the revenue, but you don’t have that cash in the bank to pay your bills.

 There are 3 types of cash flow in any business: cash flow from operating activities, cash flow from financing activities, and cash flow from investing activities.

Cash flow from operating activities is that related to the core business and you’ll be able to use the income statement to figure out the cashflow from operating activities by taking the net income and adding back in expenses like depreciation that are not actual cash outflows and adjusting for accounts receivable and payable – cash that has been earned or spent but hasn’t actually been received or paid.

Cash flow from financing activities is that which is related to – surprise – financing activities – things like loan payments you make or payments you receive from loans made to others.

Cash flow from investing activities is that associated with any investments the company has made like the purchase or sale of land or equipment.

A statement of cash flows is one of the three basic financial statements but somehow still gets overlooked by many entrepreneurs. If you’re not familiar with it, you should speak with your financial officer or accountant to get an understanding of what your business’ cash flow looks like. You can also buy my business planning book and review the section on creating financial projections to develop your understanding of the importance of cash flow and how to determine and analyze it. You can get the Kindle version here and other ebook formats here.

Basically, cash flow will give you an idea of the financial health and liquidity of your business by showing you what you actually have available to use to meet the company’s obligations. $1 million dollars in profits isn’t as awesome as it sounds if your cash flow is such that you can’t pay your rent and will be evicted before you can ever collect that $1 million. You need to make a point of regularly reviewing your cash flow and making any adjustments where necessary to improve the health of your business. If you spot some problems, try taking a look at my old video for some tips on how to improve small business cash flow.