Most new businessmen simply pull a slim air number when it comes to estimating how much money they will have to create a business. It’s actually a science. You must associate a real budget with actual numbers, then when you start the process, you know exactly – and I mean “at the penny” exactly – what you need in cash hard for your boot costs.
We therefore examine the possible costs of starting:
Capital improvements. The cost of transforming your rented space of what is now what you want and you need it. Get quotes. Keep the budget. The overruns will haunt you.
Rental. This includes the rent of the first and last month. The last month is a deposit, but it always hurts your cash flows.
Utilities. Local businesses want their “flesh book”. They want to make sure there is a sufficient deposit to cover the highest month of potential charges.
Staff training. You must leave enough time and money to cover the salaries for training. It’s an investment and not an expense, but it always costs you money. You must be ready to open.
Opening inventories. Your first orders will come to cod, so you have to put aside money to cover these expenses.
Rolling capital. If you have followed a strong financial forecast, you will know in advance what money you will need to go through the first months.
Marketing. You must let people know that you open for business. Great opening? I suggest that you do not have until you are ready. You will probably not be ready for such an important event; So avoid it for now. Ask it for it later if at all.
Contingency. Book cash for things you have not explained. They can be a shock from the bank account.
It is important that you follow this process when you start a small business. If you do not do it, you will not end up paying for pre-opening expenses with the revenue generated once you have opened and that can be the cancellation of a business. If your eye is on the bank account rather than on operations, you will suffer. As I always say, it’s not just your eye on the ball; You need to know which game you play first. And before opening you, you play in the game “Watch the budget”. If your renovator wants to make changes that cost you extra money, say no, unless you can not reduce elsewhere.
It is so important that you have a very good manager on your opening expenses in your small business. If you are a demon with your numbers before opening, you stay in this way throughout your professional life. It will be good for you and your business.