Importance of Small Business Finances

If your business has any chance of getting off of the floor and becoming successful, you need to think about your finances. Not only do you need a certain amount of money to get started, but you also need to figure out how much money you are going to need to make each month in order to make a profit. If you don't think about money, how are you going to make sure that you make any?

So, what do you need to do to get your finances in order?

First, you need to figure out how much money you need to get started. This may be just supplies that you need to start making your products if you are going to work out of your home. If you are renting or buying a physical business, you need to think about how much all of that is going to cost. Then, you still need equipment in order to get started. Don't forget about any licenses or permits that you may be required to have.

Then, you need to determine how much you need to make each month in order to come up ahead. Your break even point is going to be how much money you will need to make in order to cover your start-up fees. Then, you need to figure out how many products you need to sell in order to make a profit. So, let's say you need to make five hundred dollars so that you can break even. If you make a two-dollar profit on each product that you make, you need to sell two hundred and fifty of them the first month in order to break even. If you want to be able to pay yourself, you are going to need to sell even more! For most businesses, it can take a few months in order to cover all of your expenses, where you start to make a comfortable profit.

So, how can you fund your business in order to get started?

Most people don't have enough money to get their business started. They need some help to get started. Here are some ways to help you fund your business.

• You may decide to use your personal savings. Some people try to have a little money in savings, to help them in case of an emergency. They like to have a few months of expenses available, just in case the car breaks down, or they get hurt and lose their job. If you decide to start a business, you may want to grow your savings before you get started.
• You may be able to ask your family and friends to help you get started. If you have someone who really believes in you, they may be willing to lend you some money in order to get your business going.
• Some people take out a credit card for their business. Then, as the business becomes profitable, they can pay it back. However, it is important to know that you may be looking at twenty percent interest (or even more), so this can be quite costly.
• You may also take out a loan. There are many places where you can get a loan to help you get your business started.
• There are some grants that you may be eligible for. There are many grants that are available for those who are ready to get their business started. You may be able to do some research to find some that are local, as well as some that are for anyone who lives in the United States.
• If you are lucky, you may be able to find some investors who believe in you.
• Crowdfunding is also common for small businesses. This is when you raise money by asking people for donations. Some people even give them a piece of their business if they are willing to invest in them.

No matter which way you go, you may find yourself using more than one way of financing your business. You may not be willing to drain your savings account to get started, but you may be willing to invest five thousand dollars in it right now. You may be able to get a loan for a few thousand and then find yourself using your credit cards for the last thousand that you need.

Previously published on Medium and/or Newsbreak.