Know Your StartUp Costs
When putting a budget together for a start-up company, it can be a challenge to figure out precisely where to delegate the right amount of money to cover key aspects of your company’s operations. At a glance, everything seems important enough to deserve a piece of the funding pie. Upon closer examination, it becomes evident that certain aspects of doing business start to stand out as higher priority than others. Here are five key areas to focus on when developing a budget for your start-up:
Cover Your Rent
If your company depends on having a prime location to develop a successful operating strategy, then paying your rent will be an essential budgetary concern. Prime locations are not cheap. To make matters worse, once you sign a lease you may be on the hook for monthly rental expenses for many years to come. If you haven’t yet chosen a location, you’ll need to calculate what percentage of your budget will go to rent—depending on how much money the business is bringing in.
Accepting Mobile Pay
If you want to be able to do business in the modern tech driven market, then providing customers with a solid option for mobile payments is a crucial issue to budget for beforehand. Today’s consumer likes using mobile devices when they shop. According to professionals who offer ACH merchant services, mobile pay options backed by a well-integrated point of sale system is something that consumers demand from modern establishment owners. Make sure that a good portion of your budget is dedicated to enabling mobile pay—whether you set aside money for mobile pay equipment, or app development money, be sure to take this into consideration.
Business Insurance Needs
At the heart of putting any start up together is the need for business insurance. According to one source, it is important to first put a working business plan together to begin to develop some idea of how much business insurance your company is going to need. Factors, such as the overall number of employees, whether or not people will be driving for your company, and a minimum of projections on company earnings for three years are helpful to make a reasonable estimated determination for your company’s business insurance needs.
Of course, you would like your business to experience success, popularity, and expansion. However, once the company does expand, things will change quickly. Oftentimes, a company has a product or service that has a huge market potential, but failure to budget for expansion creates a situation where a start-up is unable to meet market demand. As a result, it becomes easier for larger competitors to seize on a missed opportunity that your company should have risen to the occasion to meet.
Especially in business, disasters have a knack for striking when you least expect them. A disaster can come out of nowhere and leave your start-up business high and dry. For this reason, sufficient funds should be ferreted away for the purpose of providing your business a reasonable amount of disaster relief. You may have to change locations, order massive amounts of inventory to replace ruined products, or accommodate a major deviation from your otherwise well-crafted business plan. Having the backup funds to keep your start-up alive during such an experience, is what separates the savvy business owners from those destined to fail.
When it comes to budgeting for a start-up business, it is that one hidden factor that you failed to plan for that will prove to be the most significant bump in the road along the way. Often avoiding these situations comes with massive business experience. Unfortunately, most start-up companies are established by people still trying to understand what running their first business is all about. For this reason, it is in a business owner’s best interest to ask other business owners which areas they failed to budget for to gain some perspective on situations and scenarios they have never considered the true financial impact of when doing business.
Following Ed Zimmerman to a Successful Startup
Before we follow Ed Zimmerman, let’s find out who he is first. He’s a lawyer, an investor, a writer, and an advisor. Okay, that seems reassuring enough.
But why even bother getting help in setting up a startup? Surely, it can’t be that hard to start a business and turn it into a success. All you’ll need is a great website and reliable products or services; gaining customers shouldn’t be so hard after that.
While in part this may be true, it’s exactly this kind of mentality that gets some entrepreneurs in trouble. It’s only during the later stages that they find out that they need to re-evaluate their business model in order for the venture to flourish and they could acquire more customers.
It’s not at all that easy to start a business. There are a number of factors to consider and the road to success is riddled with more challenges. For those who are new to running a business, this could prove to be overwhelming.
One of the major reasons why businesses fail is that they run into the problem of there being little or no market for their products or services. This could be because of a lack in demand for a number of reasons or simply because of bad timing, meaning your business offering might be ahead of its time and there’s no demand for it or it’s no longer a fresh idea and there’s lots of competition from more established companies.
Ed Zimmerman’s Lessons for Startups
One thing that Ed Zimmerman focuses on is marketing strategy. He outlines four important lessons for founding a startup
Spend money on ads after product or service launch.
All you need is common sense to know that it’ll be a disaster to advertise something that doesn’t deliver. You have to make sure that your business offering is up and running and you understand what and who it’s for.
It’s not going to matter how brilliant your marketing campaign is. What’s the use of advertising if your product doesn’t live up to the hype?
Base marketing decisions on ROI.
Data collection and analysis plays a huge role in marketing. You should take note of which practices and strategies produce the greatest returns and make future decisions based on reliable data.
Studying market trends can go a long way in helping predict outcomes. This will enable you to plan more aggressively for the future with reduced risk and gain even bigger returns.
Secure funding before hiring.
Hiring more people to help out a company’s marketing strategy may mean more potential but also translates to added cost as well. Make sure that the company’s ROI exceeds marketing cost.
Be more tenacious and aggressive when dealing with events that work.
Let’s try to put this in a context that’s more relatable. In gambling, when the odds look good, you bet big to win big. The same goes for businesses, although there’s a lot more science involved during data collection and analysis.
Following Ed Zimmerman’s lessons should be a good starting point for running a startup. If you listen to the pros today, who’s to say that it won’t be YOU who’ll be giving out advice tomorrow?