How much money do I need to start a business ?
The lure of becoming your own boss is enough to get any entrepreneurial nine to fiver out of their cubicle chair. But making the leap from business concept to real-life success takes financial resources, an airtight plan and hours of sweat equity.
Its no small task, which is why approximately half of all new businesses don’t make it past five years.
Still, finding firm ground as a business owner can be a truly rewarding experience, as well as financially lucrative. The road to success starts with understanding how much money you’ll need to reach your business goals .
Whether you’re looking to transition your side hustle into a full-time gig or you’re launching a new idea from the bottom up, speak to us first at eFinance Home Loans to see how we can assist in your business lending requirements and how we can assist with your Working Capital or just advances on your invoices today instead of waiting for the invoices to be paid.
Ask your eFinance Home Loans Business Lending Broker on a complete and Total Funding Solution to suit your business needs . CLICK HERE
Consider your Niche
As you might imagine , there’s no one size fits all ‘number’ when it comes to funding a new business or an existing one . The investment needed to launch a local dog walking service is different than a retail store or restaurant: a tech start-up requires different resources than a construction company.
When thinking about the capital you’ll need to get going, start with the basics first. Typical expenses might include:
- Initial fees, including your business license, permits and /or incorporation costs
- Rent or mortgage costs for your office, retail space or facility
- Utility costs, including upgraded internet and phone services
- Insurance specific to your business
- Employee compensation such as wages & superannuation.
Once you’ve done that, outline other purchases and recurring expenses that are required to make your business move. This might include special manufacturing or equipment costs, inventory, or other professional services, such as building a website for your business.
A shoestring approach
While you might feel overwhelmed after calculating your business’ startup expenses, know that you don’t need to be a millionaire to launch a successful new business. Are you aware that there are government funding program grants. CLICK HERE
One of the biggest ways to reach profitability on a limited budget is to keep a bootstrap mentality. This means limiting your business expenditures to the bare minimum and seeking alternative solutions to costly business needs.
For example, you may look to work with clients out of your home or at a community workspace rather than renting an office. By the same principle, you may buy slightly used equipment or second hand furniture to cut costs. It depends for every business.
Likewise, when you’re first getting off the ground, it can be wise to wear a variety of different hats – CEO, accountant, marketing guru – rather than outsourcing these services at an inflated cost.
Finding Capital to expand
Before or soon after your business launches, you may find that you need an influx of cash in order to stay above water. If you’re lucky, you might also need the cash to expand – to fill a larger order or hire additional staff to meet demand.
Tighter business practices have made it harder for owners to manage and may need to secure small business loans, we at eFinance Home Loans have access to many lenders who can assist. CLICK HERE
If you find that you’re in need of additional funds, just be sure that you know exactly what you need those funds for and how obtaining them will result in a return for your business. This is also a good time to fine tune your credit score: CLICK HERE and earmark any assets including residential or commercial property you might be able to provide as security to the business lending facility.
Alternatively, you can look to raise funds through investors. But whether it’s a family member, colleague, or business-minded acquaintance who’s willing to provide funds, know that any additional cash you secure by going down this route will likely come with conditions. In addition to giving up equity in your company, you’ll spend valuable time drafting proposals and pitching your business contacts – time that could otherwise be spent building your business .
Save time and speak with an eFinance Home Loans Business Lending Broker Today . CLICK HERE
Don’t let the business tank your personal financial situation
From nine-to-fivers, the common wisdom is to keep three months of living expenses stashed away for emergencies. If you’re an entrepreneur or self-employed, you may need closer to six months or a year.
The bottom line is that, regardless of your new venture, or don’t want a failed attempt in the business world to put you in personal financial ruin.
Restructuring your business from a sole trader proprietorship to a corporation or limited liability company can help limit what you’re personally on the hook for, should things go south. Moreover, obtaining insurance specific to your business can greatly reduce the risk of lasting financial damage from an accident or customer issue.
Get to even or call it quits
The primary mission of any new business is to reach a breakeven point. This is when the money generated by the business ( revenue ) is greater than or equal to expenses. While you still may have debt from startup costs, it’s a clear sign that you’re healthy and heading in the right direction. It can also be a strong signal to expand.
However, you may not reach this point for may months or even years – or ever ? The main point here , you may be investing thousands of your own money. Because of this , it can be smart to put a cap on what you’re willing to invest on your own at the outset. Then commit to calling it quits if you’re not trending toward profitability once those funds have been exhausted. It’s an undoubtedly tough judgement call that every business owner needs to make on their own .
Still, with the right attitude, some strategic planning and a bit of good fortune, there’s nothing stopping you from putting your business in the black for good.
Save time and speak with an eFinance Home Loans Business Lending Broker today. CLICK HERE