Starting a business can be exciting and empowering, but it can also be overwhelming and stressful if you haven’t taken time to organise your finances. We take a look at how you can best prepare yourself financially before launching into the business of your dreams.
So you have that big idea, you’ve done your market research, drafted a killer business plan and completed your due diligence. It all seems promising – until you take a good look at your finances. Having a solid financial plan and budget from the outset is crucial to ensure your business remains commercially viable and achieves sustainable growth.
In your plan, you need to calculate your budget, bearing in mind any hidden costs, tax implications, supplier upfront costs and any ongoing or recurring costs relating to technology, web maintenance, marketing, social media management, accounting, warehouse storage, shop or office leasing, equipment, insurance and fulfilment.
Once you lay out every aspect of your budget in your financial plan, you will then need to evaluate how much you need to get your business off the ground, as well as how much you will need in the future when your business grows.
Sourcing Your Finance
Once you have your budget set out, you will then need to determine whether you have the necessary funds to make your business a reality. Traditionally, financing a startup would mean using personal savings, applying for a business loan, gaining investor backing or a combination of these options. Some business owners refinance their homes and use the equity to start their dream business, which is a riskier option. The stakes are high because, if your business fails, your family home could be jeopardised.
In recent times, crowdfunding has also been a popular way of getting business finance, with the likes of Kickstarter helping thousands of fledgling ideas turn business ideas into reality. Some startups even offer friends and family small shareholdings for an initial investment to help their business get off the ground without running into too much upfront debt or giving too much of their company away.
There is no one size fits all solution, so you need to determine which sources of finance can help you achieve your business needs and come with the least risk.
Track Your Spending
Business costs, however small, can quickly add up. So if you don’t have a streamlined way of tracking your spending, you may soon find that you’re in the red when it comes to your initial budget plans.
Cloud-based platforms like QuickBooks Online offer easy to use solutions that can help you track your receipts, spending and recurring payments so you can see on a daily, weekly, monthly and annual basis what your patterns are. Your finances will also be more organised and efficient come tax time.