Many new start-ups require financing of some kind. Identify all your start up costs. You, then, must have a strong business plan.
Typical Start-up Costs
There are typical costs that every small business will encounter as a start-up. Unless you will be working out of your home, you will need to have a certain amount of money for a building or to lease office or retail space. It is customary to pay your first six to twelve months of rent upfront if you are leasing, so that you don’t have to worry about that expense while you are struggling to get your doors open and make a profit. If you are buying a building, you will need to have about twenty percent down in order to get financing for the building.
In addition, you may need financing for other things. You may want to consider six months’ worth of overhead such as utilities or inventory in your calculations for start-up costs so that you can give yourself the highest chance of success in the first year. You also want to consider initial start-up costs such as marketing and advertising, to make the public aware of your new company.
Finally, you will want to make sure you have the money to buy any equipment you might need for manufacturing inventory, computer equipment, and other office equipment, such as copiers and printers. All of these expenses should be added up to determine the amount of money you should have before you start your business. If you don’t have the money to fund this venture, you will need to look into financing and loans.
Getting the Funding You Need
The easiest way to get the funding you need is to contact local lenders. There is a lengthy application process that will require an in-depth look into your personal finances and credit. It will also take into consideration your experience in the industry you will be entering, and look at other risk factors. If you find that you are having trouble getting a loan from a lender because of tough credit markets, you can always try the Small Business Administration for business financing avenues. The SBA does not actually loan money, but will guarantee a loan making it easier to get approval from lenders. This is also a lengthy process and is in addition to the process you go through with the lender. So it might take longer to get the funding you need if you have to go that route.
The Importance of a Business Plan
In order to convince lenders or the SBA that you should be approved for a loan, you should really have a solid business plan. The business plan should include all of the information about your experience in the industry, and the experience of other key players in the company. You should also include your marketing plan, market research, and projections for profit and loss. You should also be able to include financial statements as to your own personal finances, as well as the projected expenses and income of the business once it opens. All of this information is required to qualify for financing for a new company, and it is a good idea for every small business to have a plan in place anyway to make sure that you have a goal in mind.