First Essential Steps Insure Money For Starting a Business on a Budget
Starting a business takes a realistic assessment of expenses, planning assets,
and most importantly, funding requirements. The second leading cause of
small business failure is from under capitalization. (The leading cause is
mismanaged growth). Capitalizing your new business means overcoming the high
up front startup costs, and making sure that you have enough money in reserve
to handle operating expenses for a few months while building your client base
or bringing your service or product to the market. Nothing is as
disheartening as seeing that your business has failed when it could have
succeeded with a bit more money at the right time.
To figure out your capitalization requirements, you're going to need to
itemize your start-up costs, like paying for office and work space, warehouse
space if you need it, and initial capital investments in equipment, tools and
furnishings, plus service fees (attorney time, licensing fees and state
permits). You'll also need to start the basic utilities - internet, telephone,
trash pickup, electricity and water. When you start adding it all up, it can
become more than a little daunting.
However, you don't need to do it all at once. Make a priority list. Can you
work out of a spare room in your home, or use your garage as your small
warehouse? If the type of business lets you do this, then you can postpone a
large chunk of continuing overhead expenses by doing exactly that. If you're
providing an online service business (marketing assistance, freelance writing,
and the like), you may never need to get "real" office space, though there
are some serious benefits to doing so. (Not being interrupted by your family
during business hours is the least of them!)
Another way to overcome a shortage of capital is sweat equity. When you're
starting a business, the most plentiful commodity you have is your back and
sweat, and doing things for yourself. It's easy to get into a rut with this,
so be sure that you're valuing your time appropriately - remember that the
leading cause of business failure is mismanaged growth: Getting into the
habit of doing everything yourself, when hiring an employee to free you up to
do business management is one of the classic failure patterns. Doing things
yourself will give you a gut appreciation of where the money goes, and what
jobs you'll want to delegate in the future. It'll also give you a leg up,
when you have employees, to know what all the jobs are, and how to train
people to do them to your satisfaction.
Keep an open mind during the business planning phase. Network and talk to
other small business owners, and make a habit of going to your local SBDC
luncheons every month. Learn from the people who are going through what you
went through, or have gone through it before. There will be lots of
suggestions on how to manage your business' growth.
Finally, be aware of the differences between capital expenditures, sunk costs
and recurrent expenses. Or, when it's time to spend money, don't be afraid to
do it when the opportunity strikes!
Source: Free Articles from ArticlesFactory.com
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Get detailed information free online from the author, Leon Edward, on government funding, Federal, State ,Local Grants , where to find start up grants, how to fill out applications, setting up a business steps at his website http://www.business-idea-grants.com
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