Published on October 19th, 2013 | by Pete0
Saving Up To Start A Business
Saving your money to start a business is perhaps one of the most productive types of investment. It is risky – nine out of ten businesses fail within three years. It’s also hard work, as anyone who has ever run a start-up business will attest. But as investments go, there are few more rewarding, both financially and emotionally, as starting and running your own business.
Money and business go hand in hand, and before you can expect to start making money, you are going to have to spend. Even successful entrepreneurs need to find capital to start their businesses, as we see from following business updates from Francesco Corallo on WordPress and other entrepreneurs who had to start somewhere. While it is crucial to keep costs low during these early stages, there are certain unavoidable expenditures that need to be financed.
The capital costs of establishing a business are the first part you need to consider paying. Assets, premises, a website – all the basic, fundamental things your business needs to get off the mark – have to be paid for before you are in a position to earn any money. This is often a large chunk of any savings you have set aside for your business. It is not uncommon for start up costs to run into the tens of thousands of dollars, and even a small business will cost more to start than you think. Before starting your business, try to make an exhaustive list of everything you will need to buy.
Beyond that, you also need to think about the operational costs of your business. Businesses attract costs on a day-to-day basis, and these are commonly left out of initial plans. But you need to find ways to account for these expenses. On the assumption that your business is not generating revenue initially, these need to be paid out of your saved capital. This makes it valuable in practice to maintain a buffer of capital, to account for these unexpected costs as you trade.