How Much Money Do You Need For Your New Business?
Putting aside sufficient capital is the most basic piece of information for any new business. How to figure out that magic number can be the tricky part. From my experience as a small business owner and a franchisee, the only way to get a good read on how much is enough is to buy a franchise. Related: Everything You Need To Know To Succeed In Business With an independent business, even the best business models will likely only arrive at a best estimate of required capital. With an established franchise, you can learn exactly how much money you need because the business systems are already firmly established and lots of folks operating under the same model are updating the system on a regular basis. You can find out from these other owners how much capital they needed when they started. When you have enough money to start, you’re less likely to find yourself short on cash and forced to shut down, one of the greatest causes of small business failures today. Not only do you know how much money you need to operate, you can get a clear handle on how much you need to get started. Most of my clients typically invest between $80,000 to $150,000, which includes a franchise fee, cost to fly to the training, computer systems, plus the working capital required to get the business to profitability. The number doesn’t include your living expenses, but, presumably, you know what you need to live on until you can start earning profits. The types of businesses available in this start-up category include B2B, such as temporary staffing and business coaching; personal or residential services, such as senior care or house painting; and academic tutoring. Profits may start rolling in as quickly as two to three months, but it could also take six, nine or even 12 months to get to profitability. So preparation is critical. Most expect to earn in the six figures with these types of businesses. This is highly achievable, but not everyone gets there for a variety of reasons. While many people I work with finance their new businesses entirely with retirement savings, you only need about one-third upfront and can borrow the rest. I suggest consulting a good franchise coach to help teach you how to conduct an excellent due diligence to help you choose a business that best matches your business and professional goals. You should also consult well-respected legal and accounting experts to maximize your chance of success.