How much money do you need to finance your new business?
Before you start trying to collect funds for your startup small or home business, you're going to have to have a very clear idea of just how much money you need to begin this journey.
There are many variables to consider, and some businesses will have more cash-intensive needs than others, necessitating the need to raise more startup cash.
It's very important to have solid numbers going in, and these detailed as completely as possible at this stage.
First, I'll let you in on some interesting statistics that speak directly to this issue.
Think it takes a great deal of money to get started? You may be surprised!
More than one-third of the Fortune 500 companies were started on less than $10,000. Of that third, more than 33% started with less than $1000.
The point to take away from this is that while it's important to have enough startup capital to get the job done, it's much more important to be able to manage growth effectively!
Many startups acquire too many employees and too much equipment before they're really needed, and then find themselves short when it comes to really important things like finding and securing more customers and clients.
Remember what's important here!
That said, there will be a number of items and costs that will need to be borne during this period. Some of these could include:
- Business licenses
- Initial employee costs
- Inventory if there is any
- Office equipment and phones
- Graphic design
- Business stationary
- Office furniture
- Computers
- Retail shelving
- Décor
- Advertising
- And any other items specific to your particular startup.
Detail these as thoroughly as you can, and then come up with a number that will cover you for what you consider your startup phase to be. Then add a cushion.
Typically 10% is added as a contingency, in case (or more correctly, when) unforeseen events require some of your funds.
When you come up with this number, have a plan for how you will pay these startup funds back. Will it come out of first profits, a set date, or some other arrangement?
You just need to have a plan, not only for you but for your investors as well. Don't be afraid to ask for what you need.
It can be wearying to both you and your investment sources to have to be constantly coming back to the well for more, so be prudent but ask for exactly what you feel you'll need to get your small business off the ground!
Next Page:
How To Prepare For Business Financing
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