The first step is getting an idea for a startup. Then comes the need for money to get that startup rolling. Do you have both now? Good, you’re ready to build a startup. But the thing is this. You can’t just magically create one. You need to put together startup budgeting if you’re going to get off the ground and stay afloat. Without it, money goes out the window, and you’re out of a business, trying to answer questions with the investor.
We’ve seen too many startups take this route, so it’s best to know what you’re doing. Here are six helpful tips that will get you on the right track to superstar startup budgeting!
Get Your Startup Budgeting Costs Out of the Way First
Before you do anything else with your excess cash, you’re going to need to cover the basics. This falls into two categories.
The first is monthly expenses. That includes paying rent, electricity, phone, and anything that you basically need to keep the business running. Getting good strong Internet is a plus in today’s world as well.
Then, general up-front costs need to exist to get started. What equipment do you need? How many staffers will fill the daily roles? What kind of stuff is necessary for the breakroom? You need to cover all aspects – if possible – right off the bat and have some cash set aside for emergencies.
Because of this, you’ll be able to keep afloat longer. Try to do everything last-minute, and it’s a recipe for disaster with your startup budgeting. No one needs that.
How Much Will You Make Back?
The next thing you need to estimate is how much your business makes. For example, Entertainment 7Twenty from the hit show Parks and Recreation. They tanked because they did all the spending before even figuring out an established business plan. With startup budgeting, that’s a no-go.
So check first to see what you need to make with your business and how you’ll get there. Otherwise, you’ll need to float that emergency cash. And you might just be in trouble once that depletes. Take it from Tom Haverford.
Get a Good Accountant If Possible
Another thing that made Entertainment 7Twenty fail was the lack of an accountant – unless absolutely necessary. They brought someone in after spending hundreds of thousands of dollars. As a result, they lost – big time. You do not want this to be a real-life scenario with your startup budgeting.
So get a good accountant or accounting team to help keep track of numbers. Make sure they’re met properly with expenses and sales and what-not, and figure out what you can save for later. This is vital for the growth of the business, so don’t go super-spendy when you don’t need to.
This ties into…
Prepare to Pay Those Taxes
Another thing that can throw a business off-guard with startup budgeting is taxes. Some states like to tax businesses more than others, depending on where they operate. This is something you should have prepared for.
Again, this makes accounting so vital for your business. Having someone that can save money for taxes without digging into an emergency fund is key. Without that, you’re going to run out of money. And then the worst could come out of a court case. Remember, think ahead. Make sure you cover all the bases with taxes. Because if you’re operating in someone’s city, you’ll need to make sure this particular quota is met.
You Never Know When Something or Someone Is Going to Break
“Do I really need an emergency fund with startup budgeting?” Yes, and there are several reasons why.
Even if you have an established variable cost page and cash flow statement, something unexpected could easily pop up. A machine breaks and will cost more to repair than replace. An employee gets sick and causes the workflow to fall behind. The building catches fire. Who knows, a lot can happen.
That’s why it’s vital to have that emergency fund or backup plan. If you don’t have that, business as usual is going to be a problem while you balance everything. So before you even open your doors to anyone, make absolutely sure you’ve got a nest egg for a rainy day. And don’t actually spend that startup budget on a rainy day.
Consult Others to See What They Did
Finally, advice is a sage thing. Most of the time you can get it for free, though business advisors can also provide a detailed plan. With advice, you’ll get the most from your startup budgeting.
That’s because others can tell you where they failed and succeeded. Stick to people you trust. Talk with people that understand your business and what you need to “make it,” not “fake it.” Learn from these masters, then apply these tips to your own general business. The more you learn, the better you’ll get with startup budgeting.