Give yourself the best chance of success by securing adequate funding.
Determining the amount of money you need to fund your business and where to get that money from can literally mean the difference in success or failure of your business. If you don't have enough funding you may not be able to make the purchases or hires you need to be successful, but taking on too much funding from outside sources can result in your losing control of your business.
Before you can begin to estimate the amount of funding you'll need, make sure you have written a sound business plan. If you don't have a business plan yet, you can use the Small Business Administration's online Business Plan Tool to help.
In considering funds needed, remember that some outlays will be one-time expenses whereas others will be ongoing, such as utilities and payroll.
Every business is different and has different funding needs, but a few items you should consider when determining the amount of funding you'll need in your business include:
- one-time costs such as a deposit on office space and costs of incorporating your business.
- the equipment you'll need in order to operate your business. If you're in sales you may just need a laptop and a cell phone, whereas if you're making a product you may need to purchase or lease manufacturing equipment.
- the amount of inventory you'll need to carry and whether you need to have the inventory in stock before you can start selling, or whether you can use the proceeds of sales to buy the inventory.
- costs of overhead for the first months, expenses such as electricity, phone, insurance, and rent.
- will you be able to operate your business initially by yourself, or will you need to hire staff to get started? If hiring staff take into account payroll costs such as payroll taxes and unemployment insurance.