Starting a new business is one of the most exciting yet daunting challenges a person can face. No matter how much you research, prepare, or plan the launch of a startup, there will always be a certain amount of risk. Whether you’ve launched a hundred startups or this is your first step into business, one of the most crucial aspects of your business will be the finances. Establishing a business is not something to be taken lightly and should always be done with several degrees of separation between your business and personal finances. Even if you truly believe you have the best business plan in the world and profits will start rolling in immediately, take care to consider the following before you launch.
1. Funding Options
There are always upfront costs associated with starting a business, and you need to fully understand your funding options and all the pros and cons associated with each. The majority of startups will take out a business loan, but it’s essential that you do plenty of research and comparison before taking out a loan. Visit www.biz2credit.com/ to explore business loan options for your startup. Other startups may try to find an angel investor or a venture capitalist to provide the upfront funding required.
2. Initial Overheads
From day one, your startup is going to need either equipment or premises, or both. This means you’ll need to pay rent and any other fees like damage deposits as well as to buy or lease computer equipment or even office furniture. You need to add up all your upfront expenses and ensure you can cover that as well as any ongoing costs such as printing supplies, stationery, utilities, maintenance costs, and staff wages.
3. Understand your tax obligations
Paying your taxes is absolutely essential, and not something you should leave to the last minute. Keeping track of your accounts and calculating your own taxes can be time-consuming and confusing, so you may want to consider hiring an accountant to ensure fully compliant with minimal stress.
4. Consider marketing costs
New businesses always start out as unknown entities and – aside from the gradual recommendations and word of mouth strategy – yours will remain that way unless you are proactive about your marketing. Startups are wise to keep early marketing costs as low as possible, especially if they are testing the water with a few different channels. Social media platforms like Facebook, Instagram, and YouTube can be great tools for reaching audiences targeted by location, age, or interests and are relatively low-cost. Only pay for marketing which is going to be seen by the right audience and continue to track and monitor ROI to ensure you’re not throwing away good money.
5. Keep on top of your expenses
When startups generate their first profits, there is a huge temptation to invest it straight back into the business. While this can be a wise move, it’s crucial that money is used in the right way. While you may want to upgrade your premises or take on new staff to facilitate further growth, you need to consider if those investments will really help the business to flourish at this stage. Keep track of your spending and only invest where it will add real value.
6. Look to the Future
Setting up a business can be a trying time especially when it concerns finances, so as you focus on building your business you need to also consider the future. Will you have enough finances to ensure that your successful startup stays just that way? Can you do this by making a good enough profit? Or will you have to make your finances stretch further over time as you grow? Without having a business plan in place that considers the future of the business, there is little point in trying to make your startup a success.
Take the time to look carefully into the realities of having a successful business by creating a long term plan, and carefully watch how much you are spending on particular areas. You don’t want to pour money into an area that brings back little to no revenue. However, as you grow make sure to focus on the areas that are bringing you more success.