How to ensure your business thrives in its initial years?
How to ensure your business thrives in its initial years?
Starting your first year in business can be both exciting and overwhelming. You might be expecting to make profits within a couple of months. While it's great to be ambitious, the money game teaches us the importance of being realistic.
You might achieve profitability quickly, or it might take longer. But what about your expenses until that time?
Understanding Business Expenses
A business typically incurs two types of expenses:
1. Variable Costs – These are directly attributable to your product or service and incur them only when you provide the product/service. In your first year, they might not be a major concern.
2. Fixed Costs – These are recurring, unavoidable expenses required to keep your business operational, regardless of your sales. Examples include rent, electricity, domain charges, and essential subscriptions.
Fixed costs are critical to plan for, even before launching your business. They represent the minimum expenditure necessary to keep your business running month after month.
Preparing for Fixed Costs
To set yourself up for success, anticipate your monthly fixed costs and ensure your business has a reliable source of funding for at least the first two years. Why two years? It is to ensure you are well covered through the initial growing phase where your income may be inconsistent or unstable even after you start generating revenue.
Reliable Sources of Funding
Here are some practical ways to secure a steady flow of funds:
• Partner’s Regular Income: If you have a partner with a stable salary, their contribution can help cover the fixed costs.
• Savings: Allocating a portion of your savings to draw from monthly.
• Loan or Grant: Consider accessing a loan or grant that provides regular disbursements.
This funding is not meant to limit your ambition but rather to ensure your business remains operational without putting undue pressure on yourself to achieve rapid profits.
Building a Sustainable Business
Running a business is like a marathon; it’s a long-term commitment. Allow your business the time it needs to grow organically. Avoid letting the pressure to make quick profits diminish your passion and enjoyment.
Remember why you started your business in the first place—because you love what you do. Create an environment that allows you to thrive, stay motivated, and find joy in your entrepreneurial journey every day.
To learn more about business finances, we are launching Group workshops for entrepreneurs in their initial years of business. Register your interest here - https://docs.google.com/forms/d/e/1FAIpQLScJzpQQdh3gU0UbWhOrow6_OapwaPpaOqwHLZcKLthErum-Rw/viewform
Written by,
Mrudula M
Founder & Finance Coach
Million Goals
Million Goals
-
Mrudula Muralidharan Founder
- January 06, 2025
- 07554055183
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