Starting A Small Business: Financing Your Business

No matter what line of business you go into, you will need startup capital to get your business going. Some typical startup costs facing new business owners include:

  • Electronic equipment: computer, printer, scanner, fax machine, photocopier, etc.
  • Vehicle
  • Furniture and fixtures: desk, lamps, bookshelves
  • Office supplies
  • Reference books
  • Supplies/inventory
  • Manufacturing machinery and equipment
  • Advertising: domain name, domain hosting, mailers, website design, etc.
  • Operating Space
  • Licenses
  • Permits
  • Corporation fees
  • Legal fees
  • Security deposit for renting a business location

What you need to buy can also depend on the degree to which you want to separate your business from your personal life. Many people will use their personal vehicle, cell phone and a room in their home to meet these needs inexpensively. Incorporating to separate your business assets and liabilities from your personal ones also costs money, but it offers an extra layer of protection if your business fails.

You should also consider operating costs that you’ll pay regularly in the course of running your business. Some of these may be required before you set up shop and on an ongoing basis thereafter, like insurance, membership fees and dues, loan payments, and employee wages. Make sure that you are managing your money well so that these regular payments won’t put a kink in your cash flow. In fact, regular payments link payroll and insurance are a frequently cited source of cash flow problems that leave new businesses short of working capital. At least at the beginning stages of your company, it might be a good idea to look into some of the small business financing options like asset based loans and invoice factoring. These options can get you the working capital you need when cash flow slows to a trickle.

Sources of Startup Capital
How much money you can afford to risk on your business from your personal savings and how much money you need to open for business will determine whether you need to look elsewhere to raise startup capital. Let’s consider the pros and cons of each potent