Nowadays people are so excited to launch their dream business that they forget one important aspect…establishing a budget. This is critical for creating a small business if you hope to turn it into a huge success. Most Americans do not live on a (or know how to) budget, so you can imagine it can be hard for some to create a budget for their soon-to-be business. However, here is an easy way for you to establish a budget for your business.
Legal Aspect of Business
Everyone’s business is not the same which makes it difficult to come up with a standard launching budget for businesses across the board. What business sector or industry are you entering? Do you need to automatically get your legal paperwork in order? Or can you be a Sole Proprietorship for awhile? Your legal cost should take up no more than 25% of your financial plan depending on the state you live in. I always suggest hiring a contract attorney to compile all of your paperwork and to submit it. In addition, you should think about if you are going to be an online venture and/or brick & mortar company. Both are extremely important when you first begin your business. One of them needs more licenses and permits then the other. In addition to a higher overhead for your business.
Estimated Cost: $600 based on Texas
Tools of The Trade
Outside of the legal aspect of starting your business you ask what tools and applications am I going to need to launch my business. Every business should have a website. You can launch your company website on Squarespace, which will help you save on design cost when hiring a website designer. You can still hire a website designer to customize it a bit if you choose. If you are starting a jewelry business for example you would need to purchase a Studio Light Photography Soft Box Kit, camera, laptop, Package Mailer, jewelry boxes or muslin, display stands, and more. For more advice specifically on this topic you can read my article on Tools of The Trade to help you.
Estimated Cost: $1300
Product or Service
Continuing with our example of a jewelry business, you need to determine what type of jewelry you are going to carry. Are you making it or are you sourcing it through vendors? If you are going the vendor route you need to create a fiscal plan for how much inventory you are going to purchase and how often. My friends Tiffany and Jennifer of T+J Designs actually make yearly trips to the factories overseas to purchase their pieces. If traveling is not in your budget, you can attend local or major markets in cities such as New York, Miami, Dallas, Atlanta, LA, Chicago and more. You can cultivate relationships with vendors at these markets. Most markets want you to have wholesales licenses and/or more. Which refers back to my first point above (legal aspects of business).
Estimated Cost: $600
A Solid Team
I think establishing a team around you when you first start out is a really important aspect of business as well as when establishing a budget. When I launched my business I knew people in Baton Rouge that had their own businesses but I didn’t know of anyone in Dallas. I was a lost puppy but I am honestly thankful for having been that way because it has taught me so much and I’ve truly grown. However, getting a team of talented people around you is extremely important to a solid launch. From consulting women daily, I have heard how they opened their businesses and no sells came. Getting a Marketing/PR team working with your business 120 days out is important. Also, a consultant who specializes in kick starting your eCommerce would be a great aspect to your team. That person will direct you in streamlining your approach and getting your site up & running smoothly.
Estimated Cost: $600
These four very simple things can help you formulate a financial plan to launch your dream business. If you need extra funds to further your dreams then check out some of my other articles I’ve written; such as Creative Ways To Fund Your Business and Friends and Family Savings Club.
Your estimated budget will be more or less depending on your needs. For example, I already have a laptop and camera so that would take the tools of the trade cost down drastically. As mentioned before, everyones budget will be different. My personal recommendation would to have a minimum startup budget between $1500-$3000 with 20% of it ear marked to go into a saving account for emergencies.
Photography Image by Adam; image sourced by Flickr Creative Commons
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