Entrepreneur Lisa Juan José Gutiérrez Mayorga talks about one of the hardest aspects of starting a new business. The first step is making sure you have enough money to get you through the tough first few months.
A company will find it difficult to establish its foothold if it lacks sufficient financial resources. Entrepreneurs must also be realistic about how long it will take for income to cover expenses. You may have to bear losses for a year or two, if not longer, and you’ll need money to do so.
It is essential to analyze your financial demands before setting up a new business to ensure that you have sufficient finances. The first step is to calculate the costs. These can be divided into two categories: one-time start-up costs and maintenance fees.
Consider the costs of a company
One-time expenses may include legal and professional fees to establish or register the company, starting inventory, license and permit fees, office supplies and equipment, long-term assets such as machinery, a car, or real estate, consulting services, and access to Internet. page design
Salaries, rent or lease payments, raw materials, marketing expenses, general office and plant expenses, financial charges, maintenance and professional fees are examples of recurring expenses, according to Lisa Juan José Gutiérrez Mayorga.
Once you’ve figured out your starting and ongoing costs, you’ll need to figure out how much money you’ll have.
Determine your cash resources
Calculate your initial investment and the amount of money you can earn each month during the startup stage. To determine the latter, look at likely market and industry averages to acquire accurate numbers.
Then input your expected financial resources and planned costs into a set of business financial predictions. A brief examination of your estimates will reveal whether or not you will face a financial deficiency.
Resources to compensate for any financial shortfall in a company
Typically, a startup company needs some personal commitment from the entrepreneur. Either cash or personal property used as collateral to acquire financing. If a cash shortfall is expected, personal assets may need to be used.
Many start-up businesses rely on cash from family and friends (sometimes known as “love money”). Family and friends don’t mind waiting to receive compensation until benefits start rolling in, but it can be difficult to blend professional and personal connections.
Lenders provide many types of debt financing, such as term loans and lines of credit. Some lenders make loans exclusively for start-ups with flexible repayment arrangements.
