As a start up business, one of the most important factors determining the success of your operations is your finances. Between your expenses and potential profits, there is a lot of room for error, but also success.In this blog, we’ll focus on what you should do to prepare for your start up expenses and provide you with a comprehensive step by step guide. Keep reading to find out more!
Identify Your Expenses
The first step when it comes to preparing your finances for your start up is to identify your expenses. There are many expenses that you may need to be aware of, especially as you get your head around the starting costs of running a business.
* Borrowing costs (interest fees on your small business loan)
* Insurance (both compulsory and additional ones you purchase for your business)
* Utility fees (such as electricity, gas, internet and water for your office space)
* Permit and license fees (for application and renewal)
* Marketing campaign costs (for advertising and promoting your business)
* Supply costs (for your inventory)
* Technological operation costs (for launching and maintaining your website and using accounting and payroll software)
* Employee costs (for example, salaries, wages, benefits and superannuation)
Research their individual costs
After identifying the expenses that you will need to pay for your start up, you will need to research their individual costs and figure out which payment options suit you and your business best.For example, there are many different insurance plans that you can work with at different price levels and it is up to you to choose which one is most financially sustainable for your business. A similar thing can be said for technological operation costs, marketing campaign costs, borrowing costs and utility fees.
Total up your expenses
After deciding how much you are willing to pay for each expense, the next step is to total it all up. You can work with an accountant to make sure that your calculations are right and that you have identified the right expenses with their corresponding costs. Working with an accountant may be beneficial in the long run as well, as they can help with the financial management of your business as well as more menial tasks such as bookkeeping.
Figure out a plan for the short term
The final important step to preparing your expenses is to figure out a plan for the short term. This means acquiring enough funds to cushion your expenses for the next six to twelve months of running your start up. This is so that you do not have to worry about making a profit during the beginning stages of your business, and can focus on learning the process instead. Hopefully after your six month mark, you will be able to turn over a profit and sustain your business operations financially.
Make sure to follow the steps outlined above to help prepare for your expenses as a start up business!