As an entrepreneur, you likely have a goal of creating a successful, prosperous small business. However, you may be concerned about giving it a shot, either because you've done it before or you aren't confident of the many important steps along the way.
In order to improve the chances of creating a fantastic startup, you should turn to a financial plan. This will allow you to paint a sound picture of the potential costs related to your new venture, providing you an opportunity to make smart business decisions and grow as a company. Without a financial plan in place, you could be trying to navigate a tricky world without a guide.
In addition to developing such a roadmap, you'll also have to make some other key monetary and strategic decisions during the early stages of your small business. Here are a few financial tips that you can keep in mind while building a startup:
Use a plan to estimate expenses
A new venture isn't a cheap enterprise. In fact, you'll have a number of costs right at the beginning, and predicting these – and spending in the right places – will help ensure your success. Otherwise, you could encounter a number of problems, either right now or somewhere down the line.
According to Inc. magazine, a financial plan is ideal for predicting these vital costs. In some cases, entrepreneurs are afraid of looking at the real price of a startup, and they tend to overlook some important numbers along the way. This is never ideal, and you should instead draft a plan to outline exactly what is coming your way. This can include insurance, loans, office space, supplies, labor and much more. It is much better to take note of all your expenses beforehand, so you aren't surprised and can make adjustments as needed.
In addition, a financial plan is also great for mapping out your entire first year, the news source noted. This will include rent and similar costs, plus your break-even point and helpful comparisons to other businesses. Overall, the more you know about your money, the better.
Pick the right location
While a financial plan is vital, you must also use that forecasting knowledge to pick the perfect location for your startup's first office space. Naturally, this depends on your business, as you likely want to choose a place that is in the right spot for the most customers.
According to the U.S. Small Business Administration, you must also keep in mind a number of elements besides consumer exposure. For example, take into account your brand, the competition, the workforce, safety and zoning laws, among others. That way, you'll know your office can sustain the future growth you are planning for. Furthermore, you must also keep in mind the financial side of choosing a business location. Not all office spaces are ideal, and the hidden – and not so hidden – costs can prove challenging.
In some cases, your new location will have to be renovated, the SBA explained. This is a cost few plan for, so think about it when scouting buildings. You also need to decorate, install the proper technological systems and much more. Don't forget about taxes either, as you could end up saving if you pick a different state or look for incentives from the government. Either way, make sure you consult your tax advisor before making any key decisions.
Above all else, use your financial plan to your advantage. With this blueprint, you'll be able to know where your business is headed and how you can achieve your goals.