There are so many people who want to know how to make money, but there are so many pitfalls. NO wonder that 95% of all new businesses fail. Why do so many fail? Usually for lack of preparation, lack of funding, and lower than expected income. Having a system in place from Day One is a great way to start. That is why very few franchises fail. Very few!
However, the start up cost for a decent franchise can run into hundreds of thousands. Have you ever wondered how much a McDonald’s franchise costs? Oh, mercy! But very few fail because they offer comprehensive training and support.
Let’s look specifically at one start up area where many fail – fixed costs. You have to know before opening your doors, what your fixed costs are going to be. OK – fixed costs are those bills that have to be paid every month, even if you do not sell a bean! These costs can strangle a new business in the blink of an eye. Variable costs are those that – vary – wow, rocket science! Those are costs that go up if you sell more, and go down if you sell less. But let’s stick with fixed costs, because they are more dangerous.
• Renting space for an office or store
• Admin staff salaries
• Utilities
• Taxes
• Payments on equipment
And the list goes on and on.
For goodness sake, try to find a business where these costs are low to zero. Bill Gates started in a garage – there was a reason. So, can you start at home? Can you start part-time and keep your job? Some income every month, however low, can help you survive a lot longer until your income grows. Very few businesses make money from Day One, so you need to survive – do not throw your job away! There are tax breaks for operating a business from your home – and do you really need a super computer when your sales are still zero? Be tough – think hard – a penny saved can save your skin! The old saying”, “easy come, easy go” is so true. If it’s hard to make money, then make it hard to spend. Be tight fisted with your self – no fancy cars, please!
Do you really need to hire employees? Can you use part-time self employed people? Can you get a deal where somebody gives you a few hours here and there? Can you do it yourself, even if it means less sleep?
Bottom line – avoid fixed costs if you possibly can.