You’ve decided that you’re tired of churning out hours of work for pennies on the dollar. After years of working a traditional 9 to 5, you’re ready to take the plunge into entrepreneurship. You’re not quite sure if you want to start your own business from scratch, become a freelancer, or invest in a franchise, but you have the drive and determination to see it through. You have the passion, you’ve done the research, and you know you’re going to face a lot of challenges, but you’re prepared. There’s just one problem, you have no idea how much you’ll need to get started or what resources to use to raise the funds.
No matter what type of business venture you decide to invest in, the fact remains that you’ll need cash to keep it going. Unless you’ve been saving for this day for some time, chances are, you don’t have the money you need to launch a business, let alone support yourself while you get it off the ground. Fortunately, there are several resources you can turn to to get the funds you need to start your dream. First, you need to know what it will cost.
Decide on a Business Venture
Before you can estimate costs, you must first determine what kind of business you’re going to invest in. Are you going to start a retail store? Will you provide professional services remotely? Or will you decide it’s best to look at business ideas like opening a franchise? The type of business investment you choose will essentially determine your costs. A retail store, for example, would cost more than an online business because you’ll need to pay for a building, hire staff, and cover overhead costs like utilities, a lease, etc. However, a franchise has perks like brand recognition, marketing resources, training, and more.
Once you’ve decided on a business idea, you’re ready to start calculating costs. Below, are a few startup costs you’ll need to consider:
Equipment – In order to operate there is certain equipment that will need to be purchased. This may include things like computers, printers, and telephones if you were running an office or virtual business. If you were to start a moving company, you’d need a moving van, hand truck, and so on.
Government fees – You’ll need to get your business registered, obtain an employer identification number, determine an entity type, and secure any licenses required to run a business in your state. This can cost a few hundred dollars.
Commercial property – If you’re going to open a franchise or a retail store, you’ll need to invest in commercial property. Depending on the size of the building leases can be several thousand dollars per month.
Marketing – A large portion of your startup costs will go towards advertising and marketing. It will be imperative to develop a presence both on and offline.
Utilities – If you plan on purchasing or leasing a commercial property for your business you’ll also need to get an average of the cost of utilities like gas, electric, and water.
Payroll – For every employee you hire, you’ll be required to pay them a salary. As an employer, you will also be responsible for employee-related costs like taxes and fringe benefits.
Insurance – There are a lot of risks in being a business owner. If you don’t want to end up losing everything you have as a result of an accident, disgruntled customer, or a dispute with a former employee, it is recommended that you have the proper insurance for protection.
Supplies/Inventory – If you’re running an office you’ll need furniture and supplies like copy paper, pens, and staples. If you’re running a retail store you’ll need the inventory of products.
How to Raise Funds
Those were just a few of the costs associated with starting a business. Once you’ve done the research on your business idea and have got an average on how much it will cost, you’re ready to explore avenues for funding. Below are a quick few:
- Crowdfunding – a new form of raising funds, crowdfunding is the process of asking online users for money to start your business. These funds do not have to be returned and can be used to purchase anything you need.
- Grants – Believe it or not, the federal government is more than willing to help hopeful business owners accomplish their dreams. Research various grant opportunities online and apply for free cash from the government.
- A line of credit – A line of credit is beneficial for revolving expenses like the lease, utilities, and overhead costs. You can apply and use it like a credit card only having to pay interest on the portion used.
Today, it is possible for just about anyone to quit their jobs and start living their dream. If you’ve been thinking about starting a business but have been held back because you don’t believe you can afford to, think again. By first realizing the true costs of starting a business and then using feasible options to fund it, you can hold yourself afloat until your idea starts turning a profit.