Start ups cannot prevent losses but can plan losses

Starting a new business is a lovely feeling. It is like turning your dream into reality. But it takes time to bring your dream business into full form. Initial phase of any business is always difficult. One of the negative things you cannot avoid is the losses in business, specially when it is a new one.

It is a very well known fact that a new business is bound to lose money. It is in fact unrealistic to expect instant footfall of customers and profits till your business is established in the market in the true sense of the word. The starting phase of a business is generally full of losses. Some businesses may have to encounter losses for longer time period depending on the line of business. It is all right to incur losses as long as you have a plan ready to meet them. Here is a little guide for your help.

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Be prepared

First of all, accept the situation. Losses are inevitable, therefore, don’t panic over them. Prepare for them instead. Handling planned losses is not a problem. Include provision for predictable AND unpredictable losses in your business plan.

It is a big mistake that some of the entrepreneurs make to only look at the brighter picture of starting a business and overlooking the challenges that are going to come up on the way. A new entrepreneur should see losses as costs to be met.

Watch out your business performance

While you prepare yourself and your business partners for the upcoming losses, don’t let the losses become the only way your business performance is seen. It becomes frustrating if you focus only on the losses. If you are not able to meet the budgets of the year, it might make the growth of business look irrelevant, because at the end what matters is money.

One way to handle such situation is to set smaller goals. Don’t set high targets, it turns disappointing when you fail to fulfil them. Small, achievable targets, on the other hand, will encourage you to plan and perform better next time. The secret is to “under promise and over deliver” and a big no for “over promise and under deliver”.

To conclude it all

There is a certain amount of money that is required to be spent on a business per month. This expenditure is going to be there, irrespective of whether or not the business is generating cash flow. This amount is called cash burn. It includes basic necessities such as salaries, rentals, utilities, set up, commuting and communication costs and also expenses of capital nature like business build out and fixed assets.

Planning is the only key to run a healthy and flourishing business. The initial phase of carrying a business becomes a lot easier if you have planned your cash flow and have sufficient funds in the bank. Planning keeps you prepared and preparation brings half of the solution to any problem.

One internet, one of the leading co-working spaces in Delhi, provides funding options for its start up clients. We extend assistance in the investment experience of the new businesses and offer guidance to the entrepreneurs to encounter the uncertain dynamics of the market, enabling them to successfully venture into the untapped segments.

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