Starting a business always needs some money, but the amount can vary greatly. If you have an idea for a new startup, you need to find out what you will need to get off the ground, and then work out how much it is all going to cost. Underfunding is the main reason that more than half new startups in the US fail within their first year. Don’t let yours be ones of them. Plan what you need and how you will arrange to have enough money.
Equipment
Start by thinking about what equipment you will need. If you will be manufacturing something, this could be a great deal more than if you will be an office based business that needs computers and office furniture.
It is simple these days to find out the prices of whatever you will need online, and you should do some of this very important research before you proceed with your idea.
Premises
Where will you operate from? As a one-man band, you might be able to work from home, but as soon as you start to expand you will need premises of some sort. Whether you need to accommodate just a couple of people or a team of 50 in an office space, for instance, https://www.bondcollective.com/private-office is a great place to find ample choice. They provide secure and confidential workspaces that are fully furnished, so save you all the hassle of fitting them out.
If you need a warehouse or factory premises, you should look at agents that specialize in those areas, as they will be able to help you find the best premises to suit your new venture.
Marketing
It does not matter how great your product or service is if no ones knows about it. This is where marketing comes in. You have to know who your target audience is and then aim your marketing at them. It could be local adverts, sponsorship, trade shows, or social media among other things. There are many ways to get your brand known but some are costlier than others.
One of the most effective way and also the cheapest is social media. However, for that to work, you have to be prepared to dedicate a lot of time to it and as your business grows, that can become a problem.
Signs and banners can also be good as they are usually a one-off cost. Strive to keep your marketing budget to less than 10% of your overall costs.
Website
It is vital that your website looks good, loads quickly, is easy to use and has the information that people want to see. It can be a mix of text, videos, and images that are engaging enough to keep the viewer on your site for more than a few seconds.
Your website is the first thing that many people will see relating to your business, and that first impression will stick in their mind. When people use their search engines, you want your site to come near the top. The first couple of pages is all that people bother to view according to Google, so you want your site to be there. Your ranking is affected by the quality of the content but also the number of views and the length of time they stay have a bearing.
If you are tech-savvy, there are ways of building good sites yourself, and then all you have to allow for is the monthly hosting fee. However, if you need to pay a web designer to undertake this task for you, you will need to allow for this in your budget.
Insurances
Insurance could be your savior for many different reasons. If there is a flood or fire, for instance, you will be really glad you paid for that cover. Legally there are some insurances that every business must have and you need to do some research to see how much it is likely to cost for the type of business you will be running.
A sole trader running an online business will have far less to pay than someone in the construction industry, for example, or someone that is manufacturing.
It is also important to make sure that you are covered for all eventualities. You will need liability insurances of various sort, premises insurances and maybe inventory insurance too.
Professional Fees
You really need some professional advice from the very start of your business. What legal entity should it be? What will be the most tax efficient way to set it up? Do you need contracts of employment, or contracts with your customers? These and many other matters need advice from people who are highly trained in these matters. Although their fees are not the cheapest, they could save you a lot of money in the long run. Always allow for some professional help when you are working out the costs you are going to have to cover.
You also need to realize that you may need help from different types of professional people. Accountants will be able to help with some things, where others may need the assistance of an attorney.
A professional will also be able to help you with knowledge of the fees relating to setting up a business, as different legal entities have different requirements.
Supplies
Whether all you need is a few office supplies or the supplies to make your products, you need to account for these from the very start. If you are buying raw materials, you may have to consider if they have a shelf life as well as how much they will cost. If you are going to sell ready-made products, how much inventory will you need?
If it is just a few office supplies you can probably allow a small amount, but for any other scenarios, there could be a lot of money involved.
Other Overheads
You cannot expect top take enough money in your first few weeks of trading to cover all your ongoing overheads. You may have to pay employees, utility bills, and communications to mention just a few. You need to allow an amount in your startup costs to cover these. Before you do, speak with the utility and communication companies. They all want your business and you may be surprised at what they will offer to win you as a customer.
Ideally, the first six months is the best figure to work to, as this will let you start making sales and accumulating money before the business has to bear these costs itself.
The amount of stress that not having the money to pay your staff wages can cause is not worth omitting them from your initial budget.
Travel Costs
Will your business mean that you are staff members have to travel? If so make sure the travel costs are accounted for. It would not look good if a meeting was arranged that you or your representative could not attend because you did not have enough money to get you there.
Shipping
A service business might not need to include a cost for shipping, but any sort of retail business will. It can be quite expensive to send goods especially if they are going to another country. You need to be able to send them without delay or you will lose sales. If you have to wait for some money to come in before you can ship your next lot of orders, you will lose customers as consumers these days are not the most patient of people.
Shipping companies offer a huge variety of different deals and it is worth talking with several of them to get the best deal you can.
Raising Some Funds
If you have the money to get the business started without any help, that is great, but not many people are in that position. When new startups approach investors or financial institutions like the ones at https://www.nerdwallet.com/blog/small-business/start-up-business-loans-for-bad-credit/, for a loan, they are all looking for similar information.
They will want to know where the money is being spent, and how you have arrived at those figures. They will also expect you to produce a cash flow forecast for the first 12 months at least, projected profit and loss accounts and how you intend to pay them back.
This can all get very complex and although there are online packages that will help, you really should get help from an accountant who will understand exactly what they are looking for and know how to put it together.
When all this information has been put into the right format for the financiers, it is also a good exercise for you. It will let you see if your idea is going to work, if it could be more profitable with a few tweaks or if it is a non-starter that you should forget.
To have these prepared may cost you a couple of hundred dollars, but the information you can gain from them could be worth so much more and could make the difference between a successful business or failing.
