How To: Not Become a Start-up Statistic

Ever heard the phrase “90% of start-ups fail in the first year”? 

Want to know the secret to not being a statistic? 

The key to this secret is understanding why they fail in the first place.  The headline reason start-ups fail in the early stages is because they run out of CASH!! 

So, how do you avoid becoming a statistic?

So that you can understand what it will take to run your business, you need to build a start-up budget or forecast. If your cash flow assumptions do not come to fruition, then a budget will help you understand when you might run out of money, meaning you will avoid any nasty surprises.

But where do you begin? The best place to start is by making a list.

Step 1.

Make a list of all your start-up costs, both one-off, including capital purchases (think laptops, equipment, etc) and those that will continue (yearly company fees).

Step 2.

Think about the expenses that it will take to run this business now, and also as the business starts to grow. Group these into fixed (rent) and variable (cost of sales).

Step 3.

Now make a list of where the cash is going to come from (personal investment, grant funds, bank funding etc...)

Step 4.

How will your business make money? List all your sales assumptions including pricing and consider both base level and blue sky (what does utopia look like?).

Once you have completed these steps,  you have the base information needed to start building out your budget.

At Ma’at Collective,  we have some amazing templates that can help pull this together for you into what we call a “3 way forecast,” which will help show your predicted cash flow, profit and loss, and balance sheet all in one place.

We can’t wait to help you get your business off the ground.