When first starting out with your small business, it is important to make sure that your finances are in order. Many small businesses with great products and services have fallen on hard times or even have had to close down because they didn’t have a good idea of where their funding was coming from or how much their costs would be in their budget. The costs of starting a business can often surprise even the savviest of entrepreneurs, so don’t let your dreams of owning your own business get put on hold because of financial reasons. Plan ahead. Do your research, and make sure to use the resources and services available to you from local and national partners to ensure your future success. Asking yourself these questions can help you get your planning off on the right foot.
What will you need to do your work?
Knowing what you will need to be successful versus what would be nice to have is one of the first things you’ll have to determine before you get started. Will you need any special equipment or facilities to get your business going? What about office space or any other kind of building? Small businesses spend billions of dollars on technology each year. The rate of investment in computers, servers and other technical equipment and services needed is also increasing even faster for small businesses.
Will you need help, or will you do it yourself?
One of the biggest questions that every small business owner will have to answer at some point is whether or not they will be hiring employees. Becoming an employer, rather than a one-man operation, can give you another person to work on your business’s products, but you’ll lose some of your own productive time towards managing your employee. The costs of an employee can add up more quickly than you think. Also, due to payroll taxes, health insurance benefits and other administrative costs, the price of adding an employee can add another 25 percent over what you’re paying them in salary.
How will you pay for what you need?
Very few business owners just have the cash sitting around to pay for everything their business might need to start up, or even for an expansion of an existing small business. There are many opportunities for small businesses to find the funding they need to build their company. The Small Business Administration has SBA 7(a) loans for small businesses to get federal financing on reasonable terms, as well as licensed investment centers that can offer venture capital to entrepreneurs. The SBA has offered more than $9.5 billion in 7(a) loans in 2016. With these federal offerings, as well as other options from local and national banks and credit unions, you will be able to find what you need to fund your new business.
Do you have an existing customer base that will invest in your business?
If you’ve already made a name for yourself, or have a prototype of a product that many people need and would get excited about, seeking funding from your customers may be a good way to go. Sites like Kickstarter and Indiegogo can allow consumers to pre-purchase a product they’re excited about in order to help the business get the funding they need to make it. Approximately half of crowdfunding campaigns are able to meet or exceed their fundraising goals and grow their businesses.
This article was written by Gillian Kruse for Small Business Pulse