In this series, I have been sharing some thoughts on some fundamental rules of money management that are time-tested and known to be true. If applied, these rules can help you take your finances to the next level.
Rule #6 Your business idea has a much better chance of succeeding when there is a strategic plan and a financial plan.
As a financial counselor, I routinely meet with small business owners who started their own businesses. Some of them have been wildly successful. Others have not had the success that they had expected and desired. There are always a few exceptions, but it has become very apparent to me that individuals who take the time and effort to prepare a strategic business plan AND a “Seed Fund” for their idea have a better chance at succeeding.
A strategic plan includes developing critical milestones that must be achieved and establishing detailed action steps necessary to achieve them. It should also include financial targets that must be achieved for the business to be considered a successful effort.
Having some money available to start the business with is essential as well. I have seen too many good business ideas fail before they could mature simply because the business was too highly leveraged with debt.
And of course, one should always remember Warren Buffets number one rule of money management – “Don’t lose money.”