This headline caught you because you’re planning something new. If you’re planning something that’s been around for a while, then you do know, or somebody knows, what you’ve been spending. That gives you past data to help with your planning.
So, for you newbies, first you should know that you’re not the first. Everybody who plans something new has to go through that initial stage when you don’t have past results as a base. So you estimate.
I get this complaint a lot. “I don’t know what my costs are.” Or, the interestingly naive alternative to that: “What will my costs be?” The answer is, you’d better know. Here again, if you’re never going to get this and don’t want to, but you believe in the business, then you either already have somebody who does this or you better find somebody and get him on the team. Teams, remember? Businesses don’t have to be teams, but then most of them are, and that’s because people are different.
One way or another, if you’re going to run your business you’re going to have to plan the ebb and flow of money. Deal with it. It’s not that hard. Just break it down into pieces. Guess your rent first, or maybe your salaries. Utilities are fairly easy. Health insurance. Don’t try to globally guess how much it will be altogether; break it into pieces. Your car. Gasoline and insurance. Maintenance.
And then follow up. Check your plan once a month, compare the plan with the actual results, and improve the plan. Nobody’s supposed to know everything, and nobody knows the future, but you can keep making your projections better. The hardest is the first, before you have any results. From there, things improve.
Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.
