This is Us: Fantastic! Can’t wait to hear all about it.
This is You: Everybody I’ve talked to thinks it’s great and will DEFINITELY work
This is Us: Outstanding! Get to it!
This is You: Um … okay. But where do I start and what will it cost?
Okay, so This is Us giving some tips on budgeting the costs of your start up:
1. Don’t be Shy, Don’t be Scared
As with all things in your business, it’s important to face the issues straight on and not hold back. That’s certainly the case when dealing with the money. Don’t be shy about including absolutely everything you can think of in each of the areas we’re about to mention. If you think the costs are too high, that gives you a chance to scale down and review your model of how to make it happen. If you find the numbers too confusing, it forces you to ask questions and develop a partnership with someone who can help you. Remember that you are learning about new ideas and new ways of doing things. Be bold and have the courage to take it on!
2. List all your Costs & Expenses
In whatever way you work best, list every single cost you can think of that will be involved in starting your business. It’s best to try to get two or three quotes at least and negotiate the best deal possible. Consider everything in these areas:
Materials: What you need to actually make a product E.g. fresh ingredients for a new food or drink; shirts to print on
Production: What does it cost to produce each unit? Don’t forget to include the cost of your own time, even if you’re not paying yourself at first. Later on this will be seen as an investment in the business.
Packaging: Will you use boxes, bags, jars, envelopes? Where do you get them from? What are the costs?
Distribution: How will you get the product to your customer? Standard post? Special courier?
Marketing: How will you get people to know about your product or service? Don’t forget to set aside a bit of money for this too. It doesn’t have to be a lot, but even a few business cards or post cards should be factored in. Will you be paying for design? Branding? Logo?
Technology: Everyone needs technology! Consider website support, internet provider, phone, software (always look for the free or open source stuff on the internet before buying!)
Travel & Expenses: How will you meet business clients, partners or customers? It might not be much, but for people who are starting with nothing, it’s important to remember that train tickets cost money too. I’ve often bought lunch for potential customers or people who are going to be sponsoring my company. It all adds up!
3. Work and Review
A key thing when making a budget, is to review it regularly! Don’t just write everything down and leave it somewhere. It’s supposed to be something you work with and change. You might find you need a bit more money for business cards, so you have a bit less to distribute the product. It’s okay to be flexible.
Not all of these areas will be relevant. If you are starting up a service based business, you might not need any raw materials or stock to start up – great saving! But you might need more money for a good brand and logo to be developed so that you can catch people’s attention on the internet. Be prepared to chop and change through constant review.