Those who believe that pitching the idea to potential investors is hard are confounded when those save investors ask them how much money they’ll need. Namely, launching a startup isn’t a cheap business, pun intended but it isn’t too expensive either. In fact, even graduate students can enter entrepreneurship if they have a solid enough idea and a team of people to execute it. If you are motivated and skilled enough, then money shouldn’t stay in your way if you take the following 5 financial steps.
Create a spreadsheet.
Pen and paper are nice but a spreadsheet will help you list and sum up all your costs in a clear enough way. Sort the costs into different categories and create estimates for each individual category, adding them all up in the end. If you focus on a single category at a time, you are more likely to get the final figure right. Finally, add a 10% to 20% contingency budget for the costs that you have no possibility of predicting before the launch of the startup. The amount of money that goes into your contingency budget will largely depend on the business you are entering.
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For instance, a posh hairdresser and an IT startup will have completely different budgets, both in terms of the total amount required and the categories listed.
Examining other startups.
With so many ingenious ideas today, you are likely not to be the first to launch a startup in your industry, which is a good thing. Namely, you will get the opportunity to evaluate their asking prices and decides whether you require more or less money.
Whether a particular startup has failed or succeeded is dependent on several factors but the budget is not insignificant. Perhaps their budget wasn’t enough for a successful launch or they asked for a hefty sum they spent foolishly. Anyhow, studying startups’ costs in your area or industry will help you determine belter how much money will you ask from the investors.
Not needing a whopping sum.
Like we’ve stated in the introduction, launching a startup is everybody’s game in terms of money. Every entrepreneur will tell you that the idea, the people, and dedication are harder to come by than the actual money. Dollar bills should not present a blockage of any sort because you can always save enough money in preparation for the establishment of your very own business venture.
If you grasp a couple of money-saving tips as a student or a graduate, you are more likely to excel in your startup. In fact, you might save enough money while in college to launch the startup before you get your diploma! Being money-savvy is something that you learn for years but it still comes +second to having a good plan, being audacious, and having a good idea for a startup.
What will be your business model?
The actual filling out of the spreadsheet is preceded by defining a viable business model.
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Without it, it would prove impossible to launch a startup successfully. You might want to spend an amount of money on developing a new app or getting feedback from the customer.
Furthermore, the stress can be on coming up with a solution to a problem, rather than developing software or hardware. Finally, you might have a merger in mind, an acquisition of a promising company, or you simply wish to build a physical product and sell it go a specific group of people.
Whatever of these business models you choose, the choice has to be made early on in the launch so a suitable budget can be projected.
Starting small and staying optimistic.
Although entrepreneurs can sometimes seem as not the sanest bunch on the planet, you need to be ambitious enough to start, yet humble enough to develop your startup.
Namely, we are referring to the budget that should be tailored for baby steps spending, to put it so.
You should make daring investments but they shouldn’t be high. Remember, you are still trying to feel the market’s pulse so don’t keep all your eggs in one basket.
Even if the first couple of spendings don’t go the way you planned, you need to stay optimistic, redo the budget, and invest again. If you strongly believe in your business idea, then use dollar bills to claim your entrepreneurial aspirations. We hope that by now you have a better understanding of how much money you will really need to launch a startup.
You should have a spreadsheet that will allow you to track your budget in real-time as it changes; the contingency budget included. Do some research on how your competitors have managed their respective budgets and stay optimistic throughout the launch.
Finally, keep in mind that you don’t need a whopping sum of money, as a college student can save enough money to launch a startup and run it successfully.