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You’ve had an amazing idea for a business and you feel certain that this one is a goer but you’ve already forgotten one thing: you need to have a financial plan in place to make sure that your business will be profitable.
While it is easy to get carried away with marketing ideas and creative solutions that could change the world, unfortunately, business success is mainly about making money. This means that however amazing your idea is, you need to figure out how you are going to fund your start-up before you can get your ideas off the ground.
How to Estimate Your Start-Up Costs
Before you set anything in motion, you need to estimate what your start-up costs will be. This includes everything from your office rental to paperclips, salaries to technology and electricity bills to the coffee machine.
You will also need to account for any licensing fees and legal fees you will need to pay in order to set up your company and brand. Plus, there are other one-offs such as website design and office fit-out that you will need to cover in your first few months.
Surviving these first few months will teach you all you need to know about managing your company’s finances – you will have to learn to swim quickly once you are thrown in at the deep end. Essentially you need to be prepared and ready to learn to avoid going broke in your first year.
Hope for the Best, Prepare for the Worst
No entrepreneur in the world is ever going to be a pessimist, but you do need to plan for failure just as much as you should reach for your goals. While positivity will certainly help you to keep you and your staff motivated to achieve great things, preparing for the worst will mean that you have something to fall back on if things don’t quite go to plan.
As soon as you can start saving money out of your profits, you should. This will provide a safety net of expenses so that if you have any unexpected costs, you will be able to resolve them quickly. However, as a young start-up without savings, you should also know where you can source quick cash to cover your costs in the meantime.
Find Ways to Reduce Expenses
Once you have estimated your costs and started to prepare for the worst, you should also look into how you can reduce your business expenses. It’s a good idea to look at this now, before you set up your business, as this will give you some additional leeway later on. For example, if you have budgeted a certain amount for your electricity bills in your estimations but now have a better deal, you can adjust your budget to save this money or spend it elsewhere.
Once you have an idea of how your start-up’s finances will look, you can boldly go where no entrepreneur has gone before and present your amazing idea to the world. Not only will it be the most exciting opportunity of your life, but you will also have the confidence you need to get the ball rolling and achieve your goals.