Starting a business is not easy, there are many things that you must consider before starting to start the business you want. Some of them are such as whether your business can compete with existing competitors? Does the business that you are developing need a lot of capital or not? How much capital is needed? As we know, the most important thing to support a business is capital. It might be difficult to build a business or business without capital. Therefore this time we will share some important information with you about how to estimate the start-up of capital for a starting business. Here is the information for you:
How to estimate start up capital for starting your business?
To set up a business, you must prepare the initial capital of the business, the initial capital usually includes all expenses that will be spent before we build a business. Capital will be needed by the company until positive cash flow is reached and until income will exceed expenditure. Estimating capital in starting a business is very important considering that if you run out of capital it can cause the company to fail to carry out its objectives and can even make the company go bankrupt even though it is still at an early stage. By determining the estimated initial capital of a business based on strong assumptions, it can reduce capital shortages. Here are some ways you can estimate the start-up of capital for starting your business:
1.Complete your business strategic marketing plan
The first step you need to take to be able to determine how much capital you need is of course by completing the first business plan that you will develop. First, complete your strategic business marketing plan. In this step, you need to explain how the business you will start or will you develop. Then explain what products or services you will offer to consumers. In addition, you also need to determine what strategy you want to use or apply to introduce your product or service to consumers or the market you are aiming for.
No less important is that you also need to be able to determine when the marketing business strategy is ready for you to introduce to the market and consumers. Like for example, you start to determine what media you want to use to market the product or service you offer. For example, you have compiled a plan that you want to market through advertising on radio, television, and newspapers. And you will also market via social media like Instagram and Facebook. Maybe, you also want to advertise on large billboards on the edge of the highway. If you have designed a complete marketing system that you want to do, it will be easier for you to determine the capital needed later.
2.List budget on expenses
The second thing you need to do besides completing your business strategic marketing plan is to make a list of the budget on expenses that you need. Not everything you buy for your business needs is an asset, so we recommend that you take notes because you also need to spend money on your capital expenditures. For example, you need to create a catering business. You will certainly need money to order menu designs, buy cooking utensils, build a website, and need a budget to pay your employees salaries later. Those are some examples of the expenses you need during the process of building a business.
So before determining the initial capital you need to build a business, we recommend doing the details first. What things do you need or buy to support your business? All of you have to estimate how much you need per part so you can find out how much capital you need. In addition, we suggest that you also calculate the product development costs. We recommend that you consult your supplier or vendor to get an estimate of how much it will cost for your product’s raw material. You can do small-scale research widely so you can find out the cost predictions in more detail.
3.Prepare a marketing budget for your business
Many things you must prepare to estimate start-up capital for a starting business. When starting a business, another thing we have to think about is how to market it. It is impossible for us to start a business without thinking about its marketing system because if we do not market our business products or services, it is impossible for consumers to know if the business we are running is indeed there. Therefore it is very important to prepare a marketing strategy for the business that you start later. You must record information about the marketing tactics that you will do later.
For example, in marketing tactics you want to use advertising on social media where you want to use advertising services from influencers, so you must include costs in the marketing budget. Or besides advertising on television, radio, you also want to make another marketing plan. For example, if you open a fruit juice bar business, for promotion on the grand opening you want to share 1000 cups for free to consumers. You also need to enter this budget into the marketing budget. So you can estimate how much capital you will need to build your business.
4.Estimating facility costs and equipment costs
To build a business another thing we need to think about is the place. Of course, we will need a place to open a business, for example, if we want to open a café then we have to rent a place. Even online shop-based businesses still need places and facilities, for example if you want to sell snacks online, you need production space and equipment too. Therefore in designing a business, we suggest that you estimate how much space you need to do your business. For example, the production room, retail space, office space, and warehouse depends on what business or company you are going to pursue.
If you do not know anything about the price of the property, for example if you want to rent a building, we recommend that you consult a real estate professional for further information. They can provide information to you according to what you need. In addition to estimating rental costs for space, don’t forget to estimate the cost of the facility and also the cost of the equipment you need. For detailed costs, include all the costs you need. Like including all the equipment needed as long as you open a business. By including all the facility costs and equipment costs it will be easier to determine how much you need to open your business. Also remember to include the cost of renting equipment for production or maybe the cost of buying furniture items such as tables, computers and others.
5.Estimate together a personel budget
The next thing you have to think about to prepare the costs of starting your business other than what we mentioned above is to estimate budget personnel. You might think if later you can think later after everything is done, but before starting a business, of course you have to estimate how many employees you need, and also you can start thinking about how many members of the management team you want to shape to start your business. We recommend that you start estimating how many employees you want to form to help your business run.
Initial capital is very important, so you must start thinking about the whole carefully. In addition to determining how many employees or management teams you need as mentioned above, you must also be able to determine what salary you will give them. And try to estimate these costs for the next 3 years. That way it will help you greatly.
6.Estimate general and administrative costs
Building a business is not easy because we need a lot of things to prepare. One of the things we must prepare in building a business is to prepare the initial capital or budget to start the business we want. In addition to preparing the costs that we mentioned earlier, the next thing you have to prepare is estimating administrative costs and general costs. Maybe there are some of you who are still confused about what the general costs and administrative costs are. So that you don’t forget about these administrative costs and general costs in the budget to start a business, we will explain it briefly.
These general fees and administrative costs are costs included in items such as for example office supplies needed, then insurance costs if for example you are following insurance for properties that you will use to start a business or other insurance, legal fees, and fees accountant. When you want to set up a business, then remember some of the costs that we mentioned above and don’t forget to include them in the initial capital.
7.Separate the budget that will be issued before and after the launch of your business
Establishing a business does cost money, maybe a lot of costs will be needed and you could say at first we will find it rather difficult to arrange it. But if you can manage the budget well at the beginning then we can do business well. Of course, after reading some of the points above, you know more about what you should expect to prepare the initial funds. But there is one point that is often ignored by people when they want to prepare capital or funds to start their business. That is to combine the budget or funds before and after the business was launched.
Because here we will learn to estimate the budget for starting a business, of course, we only need to record the costs we will incur before the business starts. There is no need to take notes and costs that we will spend after the business is launched because the content will be different. So our advice is to estimate costs or capital is to separate the costs that will be incurred before launching the business with the costs we will incur after launching the business. So don’t mix it into one, because the context will be different!
8.Viewing needs that are still lacking
The next step that you have to do to be able to determine what the cost or initial capital in building a business is to see what needs are still lacking for your business. After doing all of the above, you should re-see what your needs are because it could be that after you design everything there are still some needs that are still lacking so that you can make the capital you need later not in accordance with reality. So we recommend after doing some of the above. We recommend that you re-examine what is lacking.
For example, is there a need in the form of objects in your business equipment that might not have been included in the budget list. Or there might be an advertising budget that you haven’t specified. So after compiling all the budgets that we have suggested, the next step is to look back on the needs that are still lacking. So you can make improvements to the data that you create yourself so you can also estimate capital more accurately.
Those are some ways we can estimate the start up of capital for a starting business. Actually things like this are not easy, especially when starting our business, of course, it will require a lot of things. But we suggest that you don’t give up, so that your business can run smoothly, of course you have to do it painstakingly. If all the budget estimates you have entered, then you can estimate the initial net capital you need to start a business. Hopefully the article we provide this time can be useful for all, especially for those of you who just want to start a new business. Good luck in starting a business, yes, don’t give up easily in starting your business!
