Costs of Starting Up a Business
Before looking at launching into business, you will need to look very carefully at the startup costs. Not just for the initial setting up period, but to cover the early stages of running the business. Many, many businesses fail in the first year, and a lot of these because of poor forecasting. Not only will you need to look at investment to set up, but also to cover your first months or even years of trading.
What do You Need Money For?
Clever and careful planning will make a huge difference and putting together your business plan will help with this, so have a look at the section on this site that relates to that.Until you sit down and go through the way the business will run and what you will require funding for, you might just as well pluck a figure out of the air when it comes to working out what start up costs you need. Will you need to invest in props for example, and if so, look at storage costs. Will you need offices, staff, vehicles. Look at costs for insurance, overhead such as power and office equipment and supplies. Be meticulous in your planning. Be realistic, or you’ll get some way down the line and find you have run out of funds. Your business will fail.
Where does Investment Come From?
There are several places you could look to for investment for setting up costs. Unfortunately these days the bank is unlikely to be interested unless you have an account with them already for something else, whether it’s business, mortgage, personal and so on. You will have to come up with an absolutely water tight business plan to convince them, plus probably investment from another quarter, either your own or from another source. You are far more likely to be find the funds yourself or pitching for money from private investors.Venture capitalists are individuals or a company that has pooled fund to invest in companies, although they’re more likely to invest in development rather than start up and will want shares in your company in return.
Private investors are very often people or groups that you already know. With both these types of investors you’ll need to present a business plan and have clear ideas of the costs involved. Be sure of what you’re prepared to give away – you can’t change it once the deal is in place.