Starting a business is one of the most challenging tasks that anyone could go through. It is a risky, overwhelming, and daunting task that could bring you a lot of rewards or cause you to go bankrupt.
The best thing to do before starting a business is to evaluate the business critically and weigh your chances of success. Evaluate the business carefully to know if the business will float or sink.
Determine how much business loan you’ll need and how you’ll be spending the loans and other business inflow. Get a business loan calculator from Camino Financial to help you calculate the cost of your loan and monthly repayments.
Conduct a survey
Conduct a survey among your target market, friends, colleagues, and family members. Find out what they think about your product and service offerings. Ask them about your pricing models and how affordable they are.
If you are a B2B startup, conduct surveys among business owners and find out how relevant your product and service offerings are.
Crunch the numbers
Crunch the numbers and make your financial projections before you start. Estimate your projected monthly income, earnings before interest, tax, depreciation, and amortization (EBITDA), profit, turnover, etc.
Will you be getting loans for your business? Use a business loan calculator to calculate how much of your earnings will be going to repay the loan and how the loan will affect your business.
Use a business loan calculator to evaluate business loans critically
How much capital will your business need? Will you be running your business using a loan, or will you be getting money from friends and family? Will your business income be enough to repay your creditors? Think about this carefully before starting your business.
Use a SBA 504 loan calculator to evaluate your monthly loan repayments. Do the terms of the business loan favor you? Will the business remain afloat if you make such repayments every month? How many customers and clients do you need per month to afford such repayments? Are you confident of retaining at least 60% of that number while bringing in new clients and customers?
The answers to these questions will go a long way in evaluating loan terms and determining if your business will float or sink if you collect a particular loan.
How willing are people/organizations ready to fund your business?
A good indicator of whether your business will float or sink is how willing people and organizations are to fund your business. If they believe in your business idea, they will readily loan you money to start or fund the business. If they think your business is going to fail, they will be less willing to lend you money.
Study the reaction of potential investors carefully. What do they think about your business? What are their suggestions? What are their reservations? What are their fears? Evaluate these carefully and use them to finetune your business idea.
If anyone agrees to fund your business, use a business loan calculator to evaluate the terms of the loan before agreeing to the loan.
Are you an expert, or are you willing to hire experts?
If you aren’t an expert and you aren’t willing to learn or improve, your business may not succeed. You must also be willing to hire the best hands possible. If not, you’ll be pushed over by stronger, more proficient, and more experienced competitors.
Evaluate your business skills critically. Move away from the hype and the praise or adoration of yes-men or people around you. Test your skills against strangers and see how well they appreciate your offerings.