Congratulations! You have just made the decision of starting your own small business. However, before you get going, you need to consider some important financial factors to make sure you get off to a flying start and survive the competition.
Start Up Costs
Initially starting up a small business may not be very expensive, but you’ll still need to take money from your pocket for some unavoidable costs before you start seeing any profit come in. it would be best to make calculation regarding the amount of money you will need. If you under fund the business, it might be difficult for it take off in the beginning.
It is necessary that you take all factors into consideration, such as whether you will need any furniture or equipment. You may also need the services of other individuals such as a lawyer or an accountant if you are unable to complete certain tasks yourself.
You must consider marketing expenses such as advertising. These need to be properly monitored as they might sometimes get out of control. Make a thorough research of marketing methods that would be best for your business in the beginning, and expenses they could possibly incur. There are many websites, such as wonga.co.za, which could offer you help for one off testing of certain advertising methods, to see which is most appropriate for your business.
You need to consider where the money is going to be sourced. Are you planning to borrow the money from a bank or do you have a savings account, investments or any other assets that you are relying on? You could even consider a silent partner who could put up some of the necessary capital.
This could be arranged until you have reached the break-even point and have started making profit, and buy his percentage of the business back. It would also be a good idea to check out the possibility of loans, home equity or grants for funding your business.
Know Business Jargon
Before you venture into your first small business, you must to familiarize yourself with common business terms. Such as a corporation, a partnership, sole proprietorship or an LLC and so on.
Legal form of your business can also impact the tax situation and your personal liability in case of debts incurred in the business. Get much information as you can about such matters, seeking a lawyer if necessary as you never want to be in a position where you face losing everything you own.
When you start a business, you are exposing yourself and your family to several financial risks. Consider ways of managing these risks by applying for small business insurance. You may also require property insurance for equipment, stock or any hazardous material that you store in your inventory. Of course the cost of insurance varies, so it is important that you shop around for the best deal.