Starting a small business of your own can be a very rewarding experience both for your soul and your wallet. Being the boss gives you the green light to do it your way. However, before quitting your day job, it’s in your best interest to figure out what you will need financially, first.
Money in Reserve
Since most traditional banks don’t like to lend money to new businesses due of the risk factor on their investment, you need to have at least six months of reserves tucked away in a separate account just for the business. This way if you have a slow month, which you will, you’ll be able to survive and continue to grow. If you fall just a little short and must borrow some money initially for the startup, try borrowing from family first or refinancing your home. If these options are not something you have access to then take a small loan through a consumer installment loan for a thousand or so to secure the rest of the necessary funds.
Estimate the Cost of the Operation
To reduce your level of anxiety, it’s important to know up front what the business will cost each month to remain operational. You need to have a plan in place prior to opening the business or going live online. It should include a comprehensive list your estimated expenses projected for the first several months. If you have a storefront, factor in utilities and rent on top of the cost of a website, stocked inventory, equipment and marketing costs, as well as funds for your staff.
Since you are new to the business world, you might not be aware of the tax laws and deductions allowable. Because of this, it’s in your best interest to let a CPA handle your quarterly taxes to make certain that you get every deduction you are entitled to. If you have a startup business out of your home the costs will be much less.
Other Fees Associated With Running a Business
There are many hidden fees that most people don’t think about when they decide to start their own small business. From the start, you will need to register your business name and acquire a license from the state. In addition, you’ll need insurance to prevent a lawsuit from taking everything you’ve worked so hard to obtain, including your home.
Research Other Businesses
Before going forward, it’s wise to do a bit of research on the type of business you plan on starting. This is easy to acquire by checking businesses similar to yours and seeing what they do to remain successful. This can also help you avoid common mistakes that new business owners often make.
Starting your own business is an exciting time in your life. If you commit to it, plan to put in long hours initially, create an educated list of expenses, and have the funds available in reserves for a period of six months, you’ll set yourself up for success.