Starting a business can be difficult, especially with only one source of income. But if you really want to start your own company, there are a few ways you can go about raising the capital. By budgeting for startup costs, you’ll be able to get up and running much quicker. Here are five ways to do it.
1. Know What You Need
The first step in budgeting for your new business costs is knowing what those costs are. Every business is different, so figure out what it is you need to get yours started and start setting aside money. Some examples of common business startup costs include:
- Incorporation fees
2. Use a Reliable Manufacturer
When starting a new business, a reliable manufacturer is crucial for your supply chain, even for products as small as o-rings and sealing devices, because you want to be sure you have the materials you need when you need it. Without a reliable manufacturer, your supply chain could suffer and cost you more money in the long run because a disruption in the supply chain can cause customer service issues and a delay in production. That’s why you need to budget for a reliable manufacturer before you even begin taking orders. It’ll ensure you not only offer quality products but that you can actually afford to do so in an efficient manner.
3. Keep Your Business Money in a Separate Account
To avoid the confusion of how much money is business money and how much of it is personal money, do yourself a favor and open a business account. A business bank account can save you time and headaches during tax time, help you qualify for loans, empower your employees and reduce your personal liability. Sometimes banks won’t allow you to open a business account without some sort of proof that you’re a legitimate business; you may have to provide proof of incorporation or your EIN (employer identification number) before you can open a business bank account.
4. Consider a Business Credit Card
A business credit card can help you cover expenses you might not have the cash flow to cover. But make sure you use your business credit card responsibly if you get approved. You’ll also need to provide proof that you’re a legitimate business to whatever bank is issuing your business credit card. Try to use your business credit card only when you absolutely have to — the last thing you want is to go into major debt trying to start a business. Also, try to avoid carrying a balance. If you can, pay it off every month or every week. This can help boost both your personal and business credit.
5. Estimate Your Monthly Sales
Estimating your monthly sales can help you predict what your first year in business is going to look like. It can be tough to predict since the company is so new and you don’t have a reference point.
You can still estimate your monthly sales in a way that benefits the company. To begin, start with three different sales projections. The best-case scenario (the most optimistic estimate for first-year sales), the worst-case scenario (the least optimistic scenario) and the likely scenario (somewhere in between the first two scenarios).
Budgeting for Your New Business
Budgeting for a new business might seem overwhelming, especially if you’re excited to get started. By using the tips above, you’ll be in a better position to open your business on a positive note — with money in the bank and an idea of what your costs are going to be going forward.