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Starting a small business Part 9

December 1, 2012

How much money do you need to start a business?

How do you make a small fortune in the restaurant business?   Start with a large fortune.  That one kills at most CPA gatherings.

Lots, to answer my first question.  When starting a business, you need to figure out what you need including capital equipment, start up costs, working capital, safety margin.

Capital equipment includes all of the tangible assets that you need – machines, furniture, computers, phone systems, copiers, resource material, and so on.  Don’t forget Leasehold Improvements if you plan to rent space.

Start up costs include things like professional fees to get your business going, building a website, branding, first round marketing and anything else to get the business off the ground.  It can also include deposits for rent, utilities, etc.

Working capital in this sense means having enough cash to pay 3 months worth of expenses without any revenue.  You’ll need to plan out monthly expenses in your business plan financials.  You should have at least three months worth of expenses in cash.  It may take a while to get customers to buy from you and pay you.  Working capital also includes opening inventory and supplies.  You can’t fix a transmission if you can’t afford the parts.

Safety margin.  Things go wrong all the time.  Survival may rely of having a few more bucks put away to handle the problems or pay for things that you didn’t originally plan.

Make a list and get prices for each.  Add it all up.  Can you find the money to pay for this?

 

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From → Business

3 Comments
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