You are about to start a new business. You know much about this business, and that you will enjoy doing it. Your friends do support you.
Everything looks great but you need to do something crucial before you start up: You need to make some calculations.
“Will they find someone better than me?” is not a business model.
“They’ll queue in front of my door!” is not a realistic sales forecast.
“Anyway, I’ll make a profit in time!” is not a way of calculation.
You need to establish a business model and must forecast by utilising this model the kind of a turnover and profit that you will receive in a certain market in the coming years. As you make these calculations, it is better to be as pessimistic as possible. The papers always show positive scenarios!
When I say positive: If your calculations show good results only by decreasing the quality of the products and services you plan to supply your customers with or by finding some shady ways to pay less taxes to the government, then either there is a mistake in your calculations or that business line is not the right one for you. It means that you should better look for a new business opportunity.
“Isn’t there anybody who starts a new business without going into such calculations?” you might ask. Sure there is… And not only a few… ☺… Otherwise, why would almost half of the newly established companies in the world go bankrupt within their first year?
The oldie of the week: The Cardigans – Lovefool (1996)