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Why did you decide you wanted to be in business for yourself?

I don’t know why you decided that you wanted to own your own business, but I’ll bet a quid it wasn’t to earn less than you were when you were employed. And yet, according to an Australian Bureau of Statistics report – Average Earnings of Business Owners – 80% of us small business owners earn less than the average weekly wage and 40% of us earn less than half of the weekly wage of a full-time adult worker.

Now I realise that money is not the motivation for everyone who goes into business, but given the risks we run, the number of hours we work and the additional stress so many of us experience, it doesn’t make a lot of sense to also be underpaid as well.

So what’s the reason for this problem?

We’ll like most things in life, there is no simple answer. It’s generally a combination of factors, but in part 1 of this article, I’d like to just touch on two. One problem even experienced operators suffer from, is that we underestimate the capital required to set the business up and get it to a point where it is profitable.

The solution, if you haven’t already started, is to get someone else to go through your business plan and check your numbers; make sure they are realistic.

Once you are certain of your numbers, decide what options you have available to source the finance and make sure you understand the risks involved with each option. Again seek professional advice to make sure you’ve properly thought this through before you forsake the safety net. If you’ve already started, then seek out other sources of capital. This can be friends, relatives, banks or even venture capitalists; even Crowd Funding is becoming an option. Have someone independent of you work out the level of capital you really need, too much is as bad as too little. This funding issue is a topic all on its own, so make sure you get good, unbiased advice.

Another major issue for small business owners is either the lack of a business plan, or a big fat one that was prepared for some lending source, which you never open. If you have one, it probably wasn’t prepared for your benefit, but for someone else, so it’s no different to not having one – you just don’t use it to guide your business.

The solution is to use what I call a one page business plan, which sets out the general direction of the business and then from this use 90 day action plans. I love 90 day action plans, because they give you sufficient time to get things done, but short enough that you can make them really detailed, with time frames and accountability factored in. I suggest you Google the one page business plan and the 90 day action plan, as there are plenty of free templates you can use to get started.