- African-Americans are starting new businesses in record numbers. If you’re planning to launch a company in 2012, you need a financial game plan—as well as an operational one. Follow these seven economic dos and don'ts to help ensure your entrepreneurial success.<em>—Lynnette Khalfani-Cox</em>
- <b>1. Do plan to start with your own money, not someone else's</b>. <Br><Br> "Unless you win a business plan contest or inventors’ competition, for the most part there's no such thing as finding a grant to start a business," says <b>Melinda Emerson</b>, author of <em>Become Your Own Boss in 12 Months: A Month-by-Month Guide to a Business That Works</em>. "The money to start your business will come from your right or left pocket. In fact, there are three pools of money you should have before your start a business: an emergency savings account, enough budget to go from 12 to 24 months without a paycheck, and the first year of operating capital to run your business,” she says. <br><Br> Thinking of buying a franchise? "There are some franchises that provide funding," Emerson notes. "But 20 percent to 30 percent of the loan must come from your resources."
Young woman cupping hands, close-up of hands
- <b>2. Do request major funding long before you need it.</b> <br><Br> Maybe you recently saw <em>The Social Network</em>, the movie about the launch of Facebook, and thought that you could score big dollars fast from venture capitalists? Think again. <br><Br> Realize that getting money from VCs and angel investors can be a longer-than-expected process, sometimes 6 to 12 months to secure. <br><br> Plus, if you’re seeking money from more traditional sources, like a bank, "You need to be in business for two to three years to qualify for even a line of credit," Emerson says.
- <b>3. Do seek "trade credit" from vendors and suppliers</b>. <br><Br> Too many entrepreneurs dream of going to a bank and getting a business loan or line of credit for their enterprise. But maybe you don’t need a traditional bank loan at all to launch or grow your business. <br><br> If you can get your vendors and suppliers to agree to provide you with trade credit—i.e., the ability to pay for goods and services over time—you can creatively and more frugally run your operations.
- <b>4. Do get buy-in from your spouse/partner</b>. <br><Br> Many new (and veteran) entrepreneurs will tell you one of the biggest dream killers they’ve encountered is an un-supportive spouse. <b><a href="http://www.blackenterprise.com/2011/10/10/3-ways-to-maintain-a-healthy-relationship-while-building-your-business/">Make sure your partner is on board with your entrepreneurial ambitions</a></b>. If not, you'll face a host of financial arguments and money-battles that will be counter-productive to you building a business and to your relationship.
- <b>5. Don't feel compelled to buy everything</b>. <br><br> Ask yourself: Do I really need to purchase equipment, furniture, computers, etc? You may be able to get by, temporarily, by bartering, or even by renting and leasing equipment. And that's OK!
- <b>7. Don't "bet the farm."</b> <br><Br> Smart entrepreneurs don’t "roll the dice" and risk everything. They take risks—but they're calculated risks. Don't gamble everything: 100 percent of your savings, your credit, putting your home up, etc., in the hopes that you’ll create a successful business. Be willing to invest in your business of course, but not foolishly and not at the expense of everything else. <br><br> Making the leap from employee to entrepreneur is a challenging feat. But you can make your transition a lot less financially stressful and a lot more realistic by following these tips and preparing yourself for economic success.
![Have the proper capital to invest to build a franchise system that lasts. “When you build a franchise system, there are a lot of hidden costs you may not be aware of,” he says. “You have to be able to have the right people, the right amount of capital to put into your marketing program and legal costs related to your FDD [Franchise Disclosure Document].” The FDD is a legal document which is presented to prospective buyers of franchises in the pre-sale disclosure.](http://cdn4.blackenterprise.com/wp-content/blogs.dir/1/files/2011/09/Money-ladder-620x480-90x100.jpg "Money-ladder-620x480")
