How much money do you need to start a business?

How much money do you need to start a business?

It is a legitimate question that everyone who wants to start a business should ask themselves. Beginner entrepreneurs can face quite a few difficulties at the beginning of their careers. It is best to inform yourself and know what amounts it is best to invest. Learn how to do this in this article.

In situations where you do not know exactly how much money you need at the beginning of a business, how much it would be recommended to invest, we suggest you contact financial advisor companies. This way you will get some tips that can be very helpful in your journey in the business world.

Also, how can you learn better than with the life experiences of other people who were once in your place? On luminablog.com you will find successful entrepreneurs who offer valuable and reliable advice.

Successful business with small investments

A study conducted by the financial and tech services platform Kabbage among 600 small business founders reveals that more than half decided to launch their business with a maximum of $ 25,000, writes entrepreneur.com.

At the same time, a third of them managed to set up a business by investing even less than $ 5,000.

The same study shows that among the most expensive businesses you can open are restaurants, medical offices, or production businesses, the investment required for them reaching somewhere around $ 100,000.

At the same time, the businesses you can open with minimal investment (at least in the first 6 months of operation), ie up to $ 5,000, are those in the field

  • Accounting
  • Online retail
  • Constructions

Investment plan

It is convenient to calculate if you can afford to invest in your business and for how long. For this reason, it is essential that, before creating the company, we make an initial investment plan that tells us, as little as possible, how much money is needed to set up the company we want. Calculating your assets is also a good way to find out what the expenses will be to start a business.

In this plan, we will need to calculate the start-up costs, where we will add all the costs of setting up the company, the necessary equipment, staff salaries, and any expenses that may arise at the beginning of your business.

Knowing the perspective of paid customers that guarantees that you have an income is also highly recommended to know really when you start to have income, also taking into account the setbacks. With all this data, you will be able to get the initial investment figure that will be more reliable.

On the other hand, some entrepreneurs prefer to talk about cost percentages instead of fixed amounts. For example, starting a business, ie the initial expense, can collect 48% of the costs. Regular monthly expenses can be set at 12%. These expenses relate to possible rents, employee salaries, or program payments. In addition, 14% can be allocated to the expenses of the company’s suppliers. Point monthly expenses can be as high as 16%, and time-varying expenses are best set at around 10%.

Financing plan

Once you have an approximation, as close as possible to reality, you will have to choose the form of financing: a line of credit in a bank, family help, or subsidies from administrations or business organizations.

The more detailed the dissection of initial expenses and possible income, the more possibilities you will have to create a realistic business plan that allows you to present your project without problems and to be able to access an adequate financing line, in the case where you do not have the necessary initial capital.

If you need financing, you need to be clear that you need to adjust the total financing to the maximum according to your needs and prospects, so that you do not have to pay unnecessary interest. For this, it is necessary to make a financing plan in which to make a study about the different possibilities of financing our business project. From there, we can decide which options are best for us.

If you can’t invest a lot of money in your new business, we recommend that you look at the keys to starting a business without money. This way you can create your company with the minimum investment.