| | What is the Most Common Mistake New Entrepreneurs Make?
Undercapitalization of their business.
Great – what does that mean? That means that a business fails because of poor financial planning and because of not having enough capital in place to cover operating expenses. Basically you go into business, start advertising, get your extra phone line, get the necessary office supplies and equipment, etc. and if you don’t achieve microwave results, you will find yourself in a situation a few months down the road where you cannot afford to continue operating. The end result is you are finished before you even get started.
Many internet and network marketers do not come from a business background and are lured in by promises of a turnkey system, where you simply plug in and follow the leader so to speak. This is one of the great things about internet marketing in many cases; however that system needs to be complete with a business plan. Your sponsor should be able to sit down with you and conduct a six month business plan that leaves nothing to chance. Every expense should be accounted for, and a conservative estimate of your income should be used so as to project your overall success six months out. Once these steps are taken, you are now able to decide how best to capitalize your business so that you know exactly how much you are spending each month to operate and where that money is coming from.
There are numerous ways to capitalize your business i.e. small loan, home equity loan, credit card convenience check (typically with a low interest rate for 6 months) and your sponsor should also be able to identify these for you so that you have a number of options available. Be sure to spend some time exploring your options to come up with the best possible solution for you.
If you are researching network marketing companies, do your due diligence and make sure to include in your list of questions whether your sponsor will conduct a business plan with you. If you are starting out in other avenues of e-commerce or internet marketing, it might be wise to consult with a financial planner or an accountant. Whatever business you choose to get involved with, make sure you capitalize your business. It is an ingredient that could be, and in many cases is, the single most important key to your success.