Identifying business resources you'll be starting your business with already, and accounting for the resources you'll need to acquire after launching the business, is a crucial step in business planning.
To figure out exactly which resources your business is going to need, and account for those in your business planning process, ask yourself these two crucial questions:
- Does starting and growing your business require having staff on hand? If your business relies upon output from people other than yourself and your business partners, you're going to need to allocate resources for hiring staff at fair market rates.
- What type of equipment or fixed assets will your business need to get going? If your business is dependent upon purchasing or leasing equipment or other fixed assets like retail and office space, these are major considerations as you plan out your resource allocation.
Among other things, even the most simple business plans are designed to walk you through the activity of describing every source and the exact dollar amount of your initial equity capital, as well as account for the equipment necessary to produce your products or services. It can be difficult to accurately estimate your future resource needs, which is why this startup mistake is one of the most frequent contributors to young businesses running out of cash early on.
Perhaps you already have some office furniture or computers; you may have secured financing from a bank or investors or will invest your personal savings in the business. If you still require funding for your business, you may want to look into debt and equity financing.
Your plans for obtaining the necessary personnel, equipment, and cash to meet your capital expenses will need to be detailed throughout your business plan. These types of resource allocation plans are what your potential investors and business partners are going to need to see before jumping on board with your new company.
How about mentors, key advisors, supplier connections, and other intangible resources for your business? These types of relationships whose value to your business can be immense, also need to be accounted for within your business plan as they'll have a very large impact on the future growth of your company. Think of the massively positive effect your company would experience if you had a friend or family member that was a decision-maker at a large company who'd be your perfect first customer. It would undoubtedly be one of your key strategies for driving the early growth of your company. So, as you're planning your resource allocation, you'd naturally be spending in areas that make your young business more appealing to the target customers you want to serve.
In describing each of the resources that you have and need for your business to reach profitability, position each of them in terms of the value it will bring to the company, both in the near term and down the road.
It is a good time to evaluate your technical resources and requirements as well. Some businesses rely more heavily on technology than others, and such companies will need a strong IT network to get started. If building your own website won't be any trouble, then that's one major cost you'll be able to avoid as you get started with your company. Otherwise, you may need to allocate for web design, development, and other website-related expenses.
Regardless of your situation, don't be intimidated by the upfront costs of starting a business. Instead, keep in mind that in today's age, your product or service will only be as good as the technology that supports it, and if you buy or build low-grade gear, you’ll probably have to replace it in a few years anyway.
Clearly, there are a lot of different expenses to take into account as you allocate the resources for your new business. However, forcing yourself to go through this activity in extreme detail while building your business plan will save you a lot of headaches and potential failures in the future.