As Stephen C. Harper points out in his book, Starting Your Own Business, "Money is like oxygen -- you need it to live." Taking the follow pieces of advice to heart will save any entrepreneur a lot of agony down the road as the business goes through its first critical year.

  • Make sure that you have the proper funds to cover unexpected spending.
  • Get the necessary capital in the beginning. The last thing you want to have to worry about while you are working hard at getting your business off the ground is how you are going to pay for everything.
  • Resist the temptation to spend profits freely. As you begin to move from the red to the black, do not immediately spend the extra cash. Reinvest it in the business as part of your growth plan.
  • Be realistic about your expectations for income.
  • Don't expect to make a lot of money right from the start.
  • Forecast how long your business will have negative cash flow before it will have a positive cash position. Arrange financing so that you can last that long. If you think you are going to have negative cash flow for six months, be prepared for nine.
  • Get a line of credit immediately. You never know when you will need it.
  • Think ahead and secure funding before cash flow becomes an issue -- you will not get money when you need it because banks hate cash flow problems.
  • Don't invest all your money at the start of the business. Save some for growth or survival.
  • Don't risk or jeopardize all of your life savings by investing it in your business.
  • Don't mortgage your life away. Credit cards and second mortgages are not good funding sources.
  • Don't expect the bank to lend you money to start your business.
  • Don't pay for what you don't need. Never spend capital on something unless it adds true value to the business.

"Most new enterprises don't fail because they can't generate enough business -- they fail because they just plain run out of money."
-- Stephen C. Harper

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