You have a great business idea. You see an unfilled niche that only you can fill. Maybe, after years of nine-to-five drudgery, you’ve decided it’s time to turn your passion, be it repairing violins or baking cupcakes, into a profit-making enterprise. You need a plan to realize your dream, and this includes the financials. How much seed money do you need?
READ MORE: Bartlett High School Football Player Killed, Brother And 3 Others Injured In Crash
Don’t underfund your new business
Cash flow problems can lead to costly emergency borrowing and budget cutting that could bring the whole venture crashing down while still in its infancy. One-time startup costs such as business registration fees and permits are non-negotiable, but other startup expenses come with options. Consider your choices carefully. You may be able to reduce your initial investment and still give your business a healthy launch.
Finding a place to set up shop
Unless you plan to operate out of your home, you will need to purchase or rent space for your business. A good real estate agent, one familiar with the business scene in your city, can provide you with location options. If you found the perfect place that needs no alterations, great! More likely, some renovations will be needed to accommodate your plans. Get two or three bids on the project from local building contractors so you have accurate numbers to work with. That cute little shop on Main Street may require more than you think.
Contact your local utility provider to determine if you will need to budget for deposit and setup fees. Be sure to ask about the availability of smart meters, as well as tools and programs that can help manage your business’s energy use. As the nation modernizes the energy grid to the Smart Grid, you will want to harness the latest in energy-saving technologies for your business.
Equipment: Buy or lease?
List your equipment needs and compare the advantages and disadvantages of leasing over buying. For the long haul, it is generally less expensive to purchase equipment. Once you own it, you won’t have monthly payments. However, it is worth considering the advantages of leasing:READ MORE: 'We Get Spit On. We Get Things Thrown At Us': A Look At CPD's Rising Retirement Numbers
- You can have a lower initial investment
- You can upgrade regularly
- You can deduct lease payments as an expense at tax time
Depending on your business’s equipment requirements, leasing may prove to be a better choice.
Your IT needs
At the very least, you will need a business website, a bookkeeping system and inventory management tools. In the past, this meant making expensive hardware and software purchases, then hiring a technician to make it all work for your company. This has all changed with cloud computing. Rather than purchasing software, subscribing to Software as a Service (SaaS) allows you to pay-as-you-go for the use of computer applications. The SaaS vendor takes care of all updates, relieving you of the need to put an IT person on the payroll. You may still need someone to design and maintain your website, but with today’s large gig economy, it is often more cost-effective to outsource this work.
What is the best way to find your workforce? When considering your options, don’t underestimate the value of your time. A classified ad in the local paper may bring you a flood of applicants, but screening resumes, checking references and completing background checks are onerous tasks. Outsourcing to a recruitment service may be more cost effective. Visit your state’s Department of Labor website. Most offer free job posting and recruitment services.
Luck may be a factor in business success, but a good plan can make success more likely. A solid business plan with realistic startup cost figures can help you make your case at the bank and ensure you don’t run short of cash a few months in.
Want to learn more about how smart meter-enabled tools and programs can help your small business save? Contact ComEd at 866-368-8326 or visit ComEd.com/BizSmartMeter.MORE NEWS: Family Sues After They Say Chicago Police Burst Into Their Home, Pointed Guns at Kids in 2019
For more tips and inspiration for small business owners,
visit CBS Small Business Pulse Chicago.