Sounds like an interesting business, but more importantly, you need capital to do it. The most important thing you can do when setting up a startup is to set clear expenses. Such as office supplies, legal expenses, salaries and many other expenses.
If you are thinking of starting a new business, you may not know where to start with your finances. Here are some tips to help you figure out how much capital you need to start a startup and how can you get capital.
1. Start from small to large
You may have high expectations that your business will have potential in the future. After all, dark optimism can make you invest a lot of money in a hurry. You need to remember that in the beginning you have to look far and be ready to see what happens next. You do not see. Do not overestimate the value of your business idea and forget about other issues. Therefore, you should not be in too much of a hurry. Start it slowly from small to large. Start as a test, if it works, it means your business is moving forward.
2. Evaluate your expenses
The cost for creating each startup is not the same. There is no standard formula that can determine whether this type of business or that type requires capital only. However, according to Wasabi Publicity, each startup owner should have money for a fixed cost for six months.
When planning your expenses, do not underestimate your expenses and keep in mind that expenses will increase as your business grows. Yours is growing. You can easily overlook your expenses when thinking about the big picture, but you need to be clear about this. When planning your Fixed Expenses.
One of the reasons small businesses or startups fail is because they run out of money. They can afford to spend the first two or three months, but they can not afford to spend the next month. Therefore, writing a business plan without making accurate predictions or evaluations in advance is often done. Give your business a high risk.
3. Understand each type of expense you need to have
You need to understand the various costs when creating an early startup. You need to differentiate between those expenses to manage the cash flow in your business properly. For the short term and the long term ahead. For startups, you should understand the following types of expenses:
A. Essential vs. optional costs
Cost-effective is one of the expenses you must make for your company to grow and develop. Unnecessary expenses can also be made if there is money to allow for expenses. This type of cost you can pay or not pay.
B. Fixed vs Variable Costs
Fixed costs such as rent and staff salaries often do not change from month to month. The variable cost, on the other hand, varies depending on the direct selling of the product or service. Fixed costs seem like a lot compared to your income for the first few months, but if your sales Growing up, it is no longer your problem.
C. Other costs that a startup should generally have
After understanding the above types of costs, all Startup owners can come to a brief understanding of Some of the costs it faces are as follows:
- Web Hosting and Other Costs on Website Creation
- Rent a building or office
- Furniture and accessories
- Salary
- Basic Supplies for Office
- Basic Technology system or software
- Insurance, license and legal
- Advertising & promotion
- Business plan costs.
4. Predict your cash flow
Another important part of a startup’s financial plan is forecasting your cash flow. You need to anticipate it at least in the first three months of your business life. This forecast is not only based on fixed costs (Fixed Expenses), but also on the cost of goods and revenue and bad expenses.
How Much Money Do You Need to Start a Startup Business?