When you are getting ready to start a business, the very first question you must answer is: “how much money does it cost to start a business?” In this article, we are going to explain how you can determine what your costs will be.
You’ll need to think about all of the expenses of a business: cost for office space, any legal fees, business credit cards, payroll, and other expenses. These can add up quickly.
Start Small
Be careful that you don’t invest too much, too soon. Keep an open mind and, hope for the best- but be prepared for the worst. The best thing to do is start small and get a feel for your customer base and what they’re willing to spend with you.
Estimate Costs
According to the SBA, most small businesses need approximately $3,000 to get started and you’ll want to have at least 6 months’ worth of fixed costs set aside. Be careful that you don’t underestimate your costs and keep in mind that costs often rise as your business grows.
Understand the Type of Costs You Will Have
There are several different types of expenses you’ll want to consider when you’re starting your business. To properly manage your cash flow, you’ll need to know the difference between them.
- One-time versus ongoing
- Essential versus optional
- Fixed versus variable
- Startup costs
Project Cash Flow
Another critical step in your financial plan is to project your cash flow for at least the first three months. Make sure to include all fixed costs and best- versus worst-case scenarios.
If you’re not realistic about your cash flow versus your debt, you won’t be able to get very far with your business- especially as other costs come into play.
Determine Financing
Once you figure out what it’s going to cost you an estimated cash flow, you’ll need to think about how you plan to get the money to get started.
There are lots of things to think about when you’re starting a business. One of the very first steps you’ll need to take is to consider how much it’s going to cost to start a business. SV Financial Services offers a wide range of solutions to help you launch your business. Contact our offices today to explore your options.
