When launching your business you will require start-up assets. The concept of start-up assets can be divided into two separate categories or ideas.
The first category refers to anything you have on hand when starting your business. This can be anything valuable such as cash in a bank account, equipment, land or buildings. It can also refer to other valuable assets such as inventions, software or even trademarks and copyrights.
The second category of start-up assets refers to the things you will need when launching your start-up. These can be things such as machinery or equipment or even the raw materials required to build your products. It can also include assets such as office buildings or office equipment such as computers and stationary.
All of these are known as your start-up assets. And what is classified as a start-up asset will vary depending on what type of business you are launching. The reason why this is important is because these assets are a big part of the cost of getting the business started.
Calculating these assets is also important because doing so will affect the amount of funding your start-up is able to garner. You need to accurately workout how much money you need for start-up assets when looking for funding and must include these in your financial projections.
When doing this, remember that you are making estimates. The figures you come up with do not have to be exactly correct, and will probably not be exactly correct anyway. Due to this fact, you should always add about 10-20% to the figure you have estimated, and also avoid going into too much depth when working out these numbers.
The only goal is to estimate the amount of money you will need to get the start-up off the ground and to make sure you have enough money to pay for these assets, and enough money to successfully launch your business.
Something else you should take note of when estimating how much money you’ll need are operating expenses. These are different to start-up assets because they are usually reoccurring expenses. Examples of these will include things like salaries and wages, marketing expenses, paying debt on loans and also rent and leases.
When looking for start-up capital it’s important that you budget for and include these expenses. You will need enough money to pay for these expenses until the business either reaches the break-even point or becomes profitable. If you do not calculate these correctly, then it could mean your business runs out of money before becoming profitable and fails.
Remember that, when working this figure out, it can take many years for your business to become profitable. This can be one, two or even as long as five years. Due to this, it’s important to factor in these time frames when putting together your initial business plan and looking for funding.