Starting a business? Answer these financial questions
So, you want to start a business? Do you know what it takes to get your company up and running? Do you have a firm grasp on your finances, including the challenges you may confront as you build your business?
Starting a business is just as exciting as it sounds, but it can also be frustrating and stressful on many levels, especially when it comes to your finances. Whether you are trying to figure out how to start an online store to try to keep startup costs to a minimum or preparing to open a physical location in your local mall, you need to have a firm grasp of your financial standing and what will be required to get your business operational from day one.
The most lucrative businesses are those that can disrupt their space; for example, Juul e-cigarettes have been taking over the vaping industry because they are smaller, sleeker, and more smoker-friendly than many of the other smoking alternatives on the market. If you want to start a financially viable business, take your cues from industry leaders in your space to see what new value you can contribute.
You should also look to big brands for guidance in terms of your marketing and branding strategy; once you’re sure you’ve got a business-worthy, financially sound idea, then you can move forward by answering these financial questions.
- How much will it cost to take your company from idea to reality?
According to the Minority Business Development Agency, it costs approximately $30,000 to start a business, but this is only the average across multiple industries and not necessarily indicative of what you’ll need for your specific industry and business model.
Creating a concrete business plan will give you a clear idea of how much money you need to put your idea into action. Don’t rush the process of developing this business plan; not only will it put you on the right trajectory to start your business, but it will also keep you on track and help you to monitor and assess your progress along the way. You don’t want to get ahead of yourself when it comes to this part of the planning process.
- Do you need a business loan to fund your idea?
In a perfect world, you’d never require outside funding; however, many people find this is an unrealistic expectation. Even if you have some capital to put toward your business, you may still come to realize you need to take out a loan to scale your business.
According to Fundera, there are 17 distinct types of business loans. With so many products to choose from, you should be able to find one that suits your requirements, but be sure to compare the details of each and fully explore which option presents the most opportunity.
- How much should you pay employees?
A question many small business owners struggle with is determining a fair rate of pay for their employees. For example, Glass Door notes that the average salary for an entry level employee is right around $28,000 nationally.
While your instinct may be to pay the minimum for every entry-level employee you hire, you may want to consider paying a bit more to attract top talent. Whatever your approach, you need to consider what you’ll pay and how you’ll maintain sufficient cash flow for payroll.
- Which bank is best for your money?
There are thousands of banks willing to do business with you, both locally and nationally. Your job is to compare a handful of these institutions to determine the right one for your needs. Intuit shares five tips for choosing the right bank for your business. Discuss your options with a minimum of three banks to confirm you are getting a solid deal; don’t just go with the first offer you get.
There is more to starting a business than focusing on your finances, of course. You also need to invest time and energy into choosing a niche, shaping your brand, creating marketing plan, and engaging with your audience on social media (the upcoming film People You May Know is a must-see if you’re into relationship-building on social media). Nevertheless, no successful business has ever been known to ignore their finances, so getting your money in order is the first step in moving your business idea forward.
What financial questions have you been asking yourself as you prepare to launch your business? Share your business’s financial setbacks and successes in the comments.