How Much Startup Financing Do I Need?

Unless you are independently wealthy, you will probably require some start up capital to get your business started. There are several ways to fund your business venture, including using your own money, getting a loan, or finding investors. Obviously, the best way would be to use your own money so that you would retain full control of your business and to minimize the amount of debt you incur in the early stages of your business.

We assume that you will be using your own startup investment, which in many cases can be less than a couple of hundred dollars, depending on the type of business you are starting.

For starting an Internet based business you probably already have the main components and that is your computer and internet connection. If you already have these your startup costs will be relatively low. Basically you will only need to pay for your monthly internet connection and monthly hosting costs for your web site.

You will need basic office supplies such as pens, paper, envelopes and printer cartridges, but don't rush out and stock up on them right away. These expenses can be slowly purchased throughout the development of your business, but you should have a basic idea of the costs for these items for the purpose of getting your business plan together. You probably have enough of these supplies around your home that will be sufficient to get you started.

Let's begin by estimating your startup costs. Try to be realistic in your figures. This list will help get you started:

Licenses & Permits

Insurance
Telephone Deposit
Tools
Equipment
Office Supplies
Signs
Attorney Fees

Depending on the type of business you are starting, your operating costs or "working" capital will vary. More than likely, if you are running a service type business, your requirements will be lower than that of a business that is product based. Use the following list to give yourself a basic idea of the working capital you are going to need.

Office supplies

Supplies or materials
Advertising
Taxes
Legal & Accounting fees
Insurance fees
Copying fees
Shipping
Postage



Estimate your startup costs and working capital for 6 to 12 months, because that's probably what you're going to need to help you ride through the first few months. You will probably also be surprised that these figures are a tad more than you had expected right? Now what?

Discuss these lists and figures with your accountant, attorney, partner or a trusted business associate. There are a number of different ways you can get the capital you need to get started. Consider the possibility of a bank loan. In order to do this, you will need a business plan which should include a statement of your personal finances, and estimated projected income from the business. You can also consider looking into a small business loan which will require the same information as a bank loan.

Obtaining the money you need to start your own business may not be as difficult as you think. It can be as easy as adding the startup expenses to your credit card or taking out a small bank loan. Whatever course you decide to take, just make sure you have a solid business plan to help you use those finances wisely and flesh out a repayment schedule.