How Much Money Do You Need to Launch Your Business?

//How Much Money Do You Need to Launch Your Business?

How Much Money Do You Need to Launch Your Business?

You have a great idea for a business and are eager to make it a reality. Yet before you start looking at office space and purchasing supplies, have you taken an in-depth look at your finances? Do you have the money you need to launch your business, or will you have to consider alternate means to secure funds?

 

List All Expenses

Your desire to get up and running might easily override the need for comprehensive research. But underestimating expenses or overestimating immediate success are financial mistakes you can avoid with your start-up. Take the time to thoroughly review your industry, so that your financial investment and time are maximized best as possible.

Remember, you’re now going to have the expenses of your new company in addition to your everyday costs of living. Create a spreadsheet for your business costs, and categorize according to start-up, one-time, and recurring fees. These include:

  • salaries – for yourself and all employees
  • utilities
  • deposits that may be required for new utility and vendor accounts
  • insurance – company/liability, and health benefits, if offered
  • contracted labor costs
  • mortgage/lease payment
  • credit card/loan payments
  • furniture, equipment, supplies, and décor
  • attorney fees
  • miscellaneous/emergency expenses

 

Calculate Start-Up and Recurring Costs

There are several ways to then calculate your expenses. You can use AutoSum to total numbers or determine averages by dividing the totals by the time frame. Determining the money you need to launch your business and sustain it is one of the benefits of hiring a bookkeeper. Outsourcing this time-consuming process to a professional helps with forming a budget for supporting yourself while your company takes off. It’s important to know what you’re getting into, and if you have enough capital to purchase everything, or need a loan.

 

Build Relationships and Save Money

Shop around for vendors. Look for those who seem as genuinely interested in developing a long-lasting relationship as you are. They take the time to patiently address questions and concerns, discuss payment options, and understand your needs and goals. Don’t forget about bank employees and others who work in the financial field. As Forbes’ “7 Steps to Getting a Business Loan” points out, “people do business with who they know, like, and trust. Lenders work the same way.”

While researching suppliers and building networks, consider saving money by purchasing gently used equipment or furniture. It’s a great way to check off capital expenditures and to stay within a tight budget.

 

How Much is in Your Savings Account?

Even if your products or services are trending in a hot market, it’s still tough to predict immediate profits. Make sure you have enough savings to cover all of your personal and professional expenses. The amount you need depends on your size and industry. A micro-business may require as little as $5,000. Bigger start-up ventures may require as much as six months to a year’s worth of savings for sustainability.

 

Consider Small Business Loans

There are several resources available if you don’t have enough money from your own finances to start the business. In addition to banks, consider:

  • credit cards
  • loans, investments, or monetary gifts from friends and family
  • non-profit, regional, or national grants
  • crowdfunding such as Patreon, Kickstarter, or Indiegogo
  • credit union, Small Business Association, or bank loans

Since your business hasn’t made any money yet, your bank will use your personal credit when reviewing for a loan. Per Nerd Wallet’s “Where to Find Startup Business Loans in 2018,” credit scores over 700 are favorable.

DCA CPA’s expert team can assist you through this process and explain why a start-up needs an accountant. We’ll help you figure out how much money you need to launch your business, and how to fund your dream.

 

PHOTO: Flickr/CC0 Attribution 2.0 Generic

By |2018-07-19T16:22:50-05:00July 21st, 2018|Small Business|0 Comments

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