Start-up cost of your business

After having a clear and updated personal financial situation, it is time to know the start-up costs to start the business. In this case, it is also necessary to keep a detailed record of the money coming in and going out.

The financial aspect is fundamental. Many entrepreneurs decide to start their own business because they have a vision, a passion to do something that they like and that others need and they want to do it on their own terms. They want to be their own boss and manage that precious resource of time themselves. However, the dream can quickly be dashed if they don't master the financial component. The main purpose of a small business is to make money. And you need money to get started.

Be realistic and practical

It is not a matter of waiting forever to have all the ideal conditions to start a business, but it is necessary to be realistic and practical about the amount of money it will take to not only get started, but to stay afloat for a few months while you grow your sales and get a sustainable source of income. The most widely accepted ideal projection is between 6 to 12 months. However, it is not always possible to have the money for such an extended period.

Each business has its particularities and therefore the initial investment is also different for each one. There are different regulations in each locality and in each industry sector. It is necessary to take this into account and keep costs low.

Aspects to keep in mind when starting a business

It can be a physical or virtual office. Having a commercial space or running an online business, or a mix of both. Expenses will be different depending on the type of business.

A good option is to start from home, but it is not always possible. You may need to create products even if they are a part of the package of services you plan to offer, pay for space, equipment or supplies. Or maybe your business will have a strong online presence, which can take a considerable investment, depending on what you want to achieve. Can you make your website?

You may not yet be able to rely on word of mouth to get customers and you may have to rely on an advertising and promotion strategy. Can you do it yourself or do you have to hire a marketing company? If you are able to do it you still have to invest in a computer, a good phone, camera, maybe lights or a microphone, etc. Are you able to do the bookkeeping?

Identify start-up costs

The fundamental thing is to be precise, research and look for information on how much each thing is going to cost. You can't rely on estimates, you have to calculate start-up costs and expenses and their progression.

Depending on the type of business you are, so will be the expenses you will face. This is only a guide, you must analyze what aspects to exclude and what others you can include. Which aspects can you take care of and which ones can you outsource. You must put to everything a figure as close as possible to reality. Take into account one-time and recurring expenses.

Registration, licenses and permits: what you must do to create and formalize your business legally.

Commercial space: the cost can fluctuate in a short time so look for accurate information. If renovations or decoration are needed. Equipment and furniture. Office furniture and equipment, telephone, computer, camera, microphone, loudspeakers, etc. Or technical equipment needed.

Transportation: if you need to upgrade your vehicle or buy another one. As well as maintenance expenses.

Supplies, raw materials and supplies: if they are needed to develop the business.

Inventory: of all your assets.

Utilities: such as electricity, gas, water and internet, etcetera.

Taxes: Generally you have to estimate them.

Loans: if we have borrowed any, the obligations we have with banks, investors, etcetera.

Insurance: The amount we pay according to the insurance we have chosen.

Wages: the costs of a payroll by tracking the hours worked and making the payment.

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