A Financial Plan
In The Black By Design

You need to carefully prepare a financial plan to find out if you are going to have to borrow money to start your small, home based, web business.

Here is where you translate your business idea, fund raising product, fund raising idea into hard cold numbers.

Net Profit = Gross Revenue - Costs - Taxes

This is the basic financial equation of any business. In fact, it is very much like making a budget to manage your household finances. It does not need to be any more complicated than that! You can find out how simple it can be by looking at the adjoining tables.

Be Realistic

Financial planning is not something theoretical that bankers and accountants have dreamed up to make your life miserable.

Your financial plan is an essential part of your small home business plan. You get first shot at taking a cold hard look at your business idea. You will be the first to decide whether or not you can actually afford it!

If you find you cannot, then you will have to exercise due diligence and find out how you are going to make enough money to repay a loan comfortably.

You can rest assured that your bank manager will exercise due diligence in an effort to protect the bank's money … before deciding to lend any of it to you. Therefore, when and if you decide to go to your bank manager for a loan, you had better have all the right answers tested out and ready.

Keep Things Simple

Before going any further, let me suggest that you start small, so small that you will not need to borrow to start you home based web business! That should simplify your financial plan!

You might remember reading in other sections of this site that your web site has to offer helpful content. Unless your visitors already know your products or services, you will have to help them decide. They are looking for answers. So give them answers.

Your first priority as a web entrepreneur will be to provide useful and verifiable information. When your visitor becomes confident that you know what you are talking about, and has found satisfactory answers, then, and only then, will she turn into a customer.

Now, hear this. Information costs near nothing to produce. And you have to give information first anyway! So, why not start with that then? Let's have another look at the basic financial equation.

Net Profit = Gross Revenue - Costs - Taxes

Does it not become obvious that you are really in business if your costs are near zero! Any revenue that comes later is going to be nearly pure profit!!! And revenue will come, because you will make it your business to be as helpful as can be. Right?

Once you have attracted a strong readership (a strong and steady flow of visitors) you will have solid grounds to undertake the next step and "go commercial".

Fortunately, that will give you a few months to see things coming. You will have time to prepare a more involved financial plan, if need be. You will be able to - slowly - ease into the commercial phase, without ever having to invest more than you have. I will have more to say on how to do this in the monetizing sub-section.

Start At The Starting Line!

So, my recommendation is that you start as an infopreneur. It is the first form of entrepreneurship that you should take on the web. It costs near nothing to start with. It is the first step you have to take anyway.

Why? Because you have to have traffic going through your web site before you can hope to sell your products or services. No traffic, no sales, period. A small store in a dark back alley is not likely to become a successful business! Fortunately, you do not have to pay hundreds of dollars a square foot to have a store on a very busy commercial street. You can build your own traffic, nearly free!

Your cost? Patience, determination, method, a solid overall plan … and faithfully stick to your plan!

A financial plan must be built on solid grounds. If you later have to borrow money to expand your web business, you will have the greatest of arguments to convince and persuade your bank manager. Traffic, lots of traffic. You will have verifiable numbers to prove it! You will also have become highly confident of easily being able to repay the loan.

The Case Of The Home Based Infopreneur

Infopreneurship is the most efficient form of entrepreneurship on the web. It is my case, so it is easy for me to quote actual figures and give factual insights.

The financial plan of the infopreneur is the simplest and least demanding of all. The infopreneur's financial requirements can be compared to those of a book author.

As an infopreneur, you generally work alone. You may begin to need extra help when your income rises in the six figure range. Even then, you may only need a part time secretary to help out with the paper work!

The infopreneur does not have to:

• manufacture anything,
• store anything,
• hand ship anything.

As an infopreneur, you do however have to write enthusiastically and knowingly about your deep and enduring love affair with a:

• hobby,
• work experience,
• special skill,
• ... even someone else’s product or service … as an affiliate !

You can transform a passion for something into a steady, even increasing, income. Furthermore, you can do it on a very limited budget. As a home based infopreneur, you can easily run your small web business on an operating budget of less than 1000 USD per year! (see adjoining table titled Operations Cost Estimate)

That does not mean that your income will be held low! If you plan correctly and build your small web business as planned, you can very easily recover all your costs within the first year of operation … and more, much more.

As an infopreneur, you will be creating content (text, pictures, graphics, audio files, video files) for your web pages. You will not be manufacturing hard goods, and you may not even be offering your services. Therefore, you do not need much, at least to start with. Your financial plan will be very simple to produce.

In fact, you may already have most of what you need, right in your own home. Start with what you already have to keep your startup costs to a minimum. (See adjoining table on Startup Cost Estimate).

From what you can see in the adjoining table on Startup Cost Estimate, the total starting capital required for your small web business may be as low as near zero (0) and perhaps as high as 1500 USD (maybe ... if you have just landed from Mars, and are starting from scratch)!

I keep my costs low by using as much of what I already own, and I use as many free software packages possible. As I mentioned earlier, I am a "pure" infopreneur. I keep my financial plan lean and effective. Now, let's have a look at the table on Operations Cost Estimate. (See adjoining table).

As you can see from the table on Operations Cost Estimate, my operating cost is comfortably less than 1000 USD per year.

With startup and operational costs this low, you should not need to look for outside financing. Consequently, your financial planning could very well be limited to what the adjoining tables show. That is, if you plan to start as a pure infopreneur!

On the other hand, if you plan to:

• build things with your own hands, that you will later sell,
• or if you plan to manufacture things
• or if you plan to buy things that you will resell at a profit,

then you will have to re-evaluate your financial requirements accordingly. In that case, your financial plan would become more involved.

Stay Tuned!

Do come back often. I will be adding to this site regularly.

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