When starting a business it’s important to have budget basics tackled. Take a peek at my personal budgeting post to get you started laying the groundwork for successful budgeting.
First, you’ll need to identify startup expenses as well as on-going ones.
These are any expenses you may have that will occur before you see any income from your business.
- For partners, paying for a lawyer to draft up a contract to protect your interests is vital.
Every business requires some amount of capital to get off the ground. Once you’ve determined what your startup expenses will be, you’ll need to decide how you’ll fund it.
- Savings- easiest option if you have the available cash flow
- Bank loan- it’s possible to get a personal loan, but you may not get the best interest rate. Banks aren’t too thrilled to give out loans to new businesses, as the risk is high for them. You’re much more likely to secure a business loan after you’ve been in business for a few years.
- Credit card- if your startup expenses are minimal, a credit card could help you bridge the gap to getting going
- Loan from a family member or friend- I’d consider this the last resort. It could be convenient but when you’re starting up a business, it’s best if you don’t have to also worry about the watchful eye of your creditor. It’s a lot less complicated dealing with a lender who you don’t have a personal relationship with, keeping it all about the business.
- Recurring expenses
- Annual and semi annual taxes and licensing costs
- Website and and email maintenance
- Mailing list hosting
- Bookkeeping programs
- Incidentals- it’s always good to create a cushion in your budget for unexpected expenses.
After beginning your journey, it’s important to make it a priority to pay back any sources of debt created by your startup expenses and bring the company into the green. Otherwise, those debts can follow you for way too long. Expenses have a way of compounding so it’s best to take care of debts right off the bay.
Once you’ve established, find a bookkeeping method that works for you. It’s most important that you’re able to understand and outline your own budget so that you’re able to see the big picture.
What’s helped me stay on track is to create a three year budget, exchanging estimates for real numbers as they are seen in year one. This can help keep you on track as you move forward.