Entrepreneurs can benefit from forecasting software to see what their business may look like six months to a year down the road, thus allowing them to create financial plans. But there are also several things that are unpredictable, such as the amount of time that it will take the new company to catch on with customers and how the firm's products will be accepted by potential clients. This is why Inc. magazine suggests scaling back the enterprise and taking a more conservative approach during the business planning process. Here are a few situations entrepreneurs should keep in mind when they are trying to become a key player in their marketplace:
Money is going to be hard to come by
When just launching the firm, entrepreneurs have to know that it is going to take a long time to begin generating real profits that the company can grow from. This is why the business plan must be strong and able to account for certain times that will be more difficult than others. According to The New York Times, entrepreneurs have to know the industry they are entering and when they can expect to see the highest and lowest sales numbers.
"Understanding the industry is key," Gillian Murphy, director of the San Joaquin Delta College Small Business Development Center, told the paper. "If someone is going to start a floral shop and they do a projected profit-and-loss statement and I don't see spikes in February and May, they have no idea what they're doing."
There are going to be problems with products
If every company started off without a hitch, small businesses would be popping up all over the United States, but unfortunately that isn't the case. Sometimes products need to be adjusted, services aren't meeting the needs of customers and the business plan may need some tweaking. In all of these cases, entrepreneurs don't need to worry. If financial forecasting tools are being utilized to their potential, entrepreneurs will have accounted for the tough times that will occur during the startup period.
Key decisions will take time
Entrepreneurs often band together a team of their close colleagues, investors and advisors who are all there to help them launch their businesses successfully. However, many of these people are on different schedules, and strategic planning isn't always the first priority on their mind. This is why entrepreneurs must understand that when the company has to make a difficult decision, it isn't going to happen right away. Everyone on board needs to be briefed with the situation at hand and the potential solutions.