These days, starting a small business doesn’t cost nearly as much as it used to. In the past, if you wanted to launch a company of your own, you’d usually need to spend a fortune on everything from real estate for your new venture, to staff members, suppliers, and even warehousing. These days, low-cost business models, from drop-shipping and e-commerce to service-based companies, can keep the initial costs of launching your own company as low as possible. This means you can invest more money in growing your business, rather than getting it started. So, how much does it actually cost to start a small business? Here are some factors you’ll need to consider when calculating the expenses.
How Much Do You Need from a Small Business Loan?
While there will be various long-term costs associated with running your small business, like paying your staff wages and investing in marketing, the first thing you’ll need to consider is how much you need to borrow from a small business loan. There are various options available today, including small business loans with access to a variety of support networks to help get you started in any industry. To calculate how much you need from a small business loan, you’ll need to calculate the startup costs required to get your company off the ground. A financial plan can help with this and show potential loan providers you’ve considered all of your possible needs carefully. Points to consider when calculating what you might need from a small business loan include:
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Your business model: Generally, it will cost more to run a business which requires things like real estate and professional staff members than it would to run a one-man service business. Think about the business model that makes the most sense for you, and the kind of associated costs that come with it.
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Available extra funding: Outside of your business loan, you may have some of your own savings to put towards your company, as well as grants you can access from various startup groups. Make sure you consider these costs too.
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Look at both one time and regular expenses: Business expenses for a startup will include everything from permits and licenses when you’re getting your company up and running, to signage, website design, logo design, and brochure or business card printing. You may also want to think about the initial few months of rent, payroll, and marketing costs.
It’s Better to Overestimate than Underestimate
Ultimately, when starting your own company, it’s best to over-estimate the amount of money you need, rather than leaving yourself short. Getting a good idea of how much you’re likely to need for assets like business cards, a website, and various other essentials, then rounding up should ensure you have additional money leftover if there’s an important asset you forgot about. If you’re not sure how much cash you need after doing some careful calculations, you might find it’s beneficial to use virtual accounting services or speak to a business advisor to help you understand the financial side of planning your business.