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As you know, every business begins with funding. Matter of fact, experts say that a healthy amount of funds for a new business is a minimum $80,000. But how do you get started?
Let’s take a look at Howard Schultz, the founder of Starbucks. In 1985, he needed $400,000 to launch his business and open the first coffee shop. After 200 investors turned him down, Schultz took it upon himself to raise the money that began the Starbucks empire.
While that worked for Schultz and was the start of a multi-billion dollar enterprise, there are now many easier ways of getting your business funded, and most can get you start-up money in just a few short weeks.
If you’re unsure how much you need or how best to use the money, read more below for some tips on getting started.
Consider the Costs
As mentioned above, the average cost of starting a new business from scratch is about $80,000, according to a study conducted by the Ewing Marion Kauffman Foundation.
Small businesses, including freelance, online or home-based, require less funding—sometimes as little as $3,000. Franchises are also a low-cost option. In fact, some home-based franchises can be launched with as little as $1,000 to $5,000. It all depends on your industry, location and how big or small you want to start off.
But it’s always better to have more than you need than to need more than you have. This will help you account for unforeseen issues and calamities.
To help entrepreneurs begin calculating the startup costs for their new business, the Small Business Administration offers the following list of necessary costs using a pizza restaurant as an example:
-Rent: security deposit, first month’s rent and first month’s utilities (including phone and internet)
-Improvement costs: kitchen, tables/furniture and utensils/dishes/kitchen and bar equipment
-Inventory: food, beverages and alcohol
-Miscellaneous: licenses and permits, legal fees, signage, technology and software
-Rent: monthly rent, property insurance and utilities
-Employees: payroll, payroll taxes and health insurance
-Professional services: accounting, legal and consultants
-Supplies: office and operating supplies
-Marketing: digital advertising and promotional materials
-Miscellaneous: liability insurance, repairs, maintenance and organizational dues
Do your homework
While most start-ups can be categorized into brick-and-mortar businesses, online businesses or service providers, each type of business incurs different expenses depending on the business type. Keep in mind that most will include the following:
–Paying employee salaries
–Building advertising and marketing campaigns
–Conducting market research
–Developing communication materials
-Creating and maintaining a website
–Developing a social media presence
–Renting office space
–Buying equipment and supplies
–Paying for utilities and insurance
–Acquiring licenses and permits
–Hiring a lawyer and accountant
Before launching your brick and mortar business, really ask yourself if you need to be in actual building to operate. For some industries, this is an absolute must, but if your business can operate just as good in an actual store as online, than consider operating as an e-commerce site.
It doesn’t have to be forever but without the expense overhead costs of a having a physical office, you could save you thousands of dollars on upstart costs. This would allow you to save money to purchase a bigger and better brick and mortar that you would have otherwise been unable to afford.
Conserve your money and always spend smart
By starting a lean business, you can grow at your own pace and within your financial means. Spending smart should become your mantra.
Some things to remember:
–Keep your costs low and make every dollar count.
–Keep your business and personal accounts separate.
–While you need to pay your employees, be prepared to take little or no salary for the first year.
–Try to reduce your personal expenses.
–Remember that leasing can be cheaper than buying.
–Do not rush into opening a physical office space.
–Find a savvy and trustworthy banker.
–Learn everything about your business.
–Remember that full-time employees are a huge overhead. Part-timers, freelancers and independent contractors are cheaper.
Don’t be fooled into thinking that you need a big, flash office, expensive furniture or 50 employees on day one to be successful.
The recipe for success is the same for the quaint mom and pop as it is for the big-shot tech company sitting on prime real estate…hard work, patience and dedication.
So, start small and grow as your business grows.
While every business requires money, remember that there are many options to help you achieve your dream of entrepreneurship. And lucky for you, we have en entire department here at Inc Authorit dedicated to getting business owners funding for their enterprise.
And we have good relationships with a lot of funding agencies which means more money on more favorable terms for you.
Incorporating is the most powerful thing you can do to legitimize your business. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your free LLC today and enjoy the protection due to you and your business under the law.