The creation of new companies has increased at an accelerated speed in recent years. More and more people are realizing the advantages of owning their own business, and that despite the risk, staying in a job is no longer synonymous with security.
Fortunately, this is the best time in history to create a company, today is precisely the day that you should start fighting for that idea that has been going around in your head for days or even months.
Thanks to technological advances, we have the possibility of accessing information that years ago would have been impossible to acquire. We have the possibility to communicate in real time regardless of our location, to sell products without being present, to offer a service and earn money even when you are asleep.
The most important thing and the reason why we are writing this article is that creating your own business today is cheaper than ever. But surely you are wondering how much money I need to create a company.
Clearly you will need to plan, create a product or service, design a business model, test it, do a market study and validate your idea. These activities will cost you more time than money.
Read also: How to create a company (Guide of 8 essential steps)
The costs to start a small business can vary widely based on different factors. That’s why we can’t give you an exact number. The type of business you plan to create, its location and if you will need collaborators.
5 Factors to determine how much money I need to start a business.
1. The location of the business.
You will have to think about where it is most convenient for you to start, since this will have a direct impact on your initial costs.
For example, if you are buying or renting a specialized unit or facility, you will need to find the money for the purchase or rent, as well as think about utilities and taxes.
Also read: How to have a nice office when you are starting your company.
However, if you plan to operate the business from your home, your initial investment will be considerably less. It’s even the smartest way to test your business model.
If you like fashion and want to launch your own clothing brand, don’t think directly about starting by opening a physical store. You could start selling online with a virtual store. Your potential customers would see your products from their cell phones and would have access to them 24 hours a day. Starting with a local will be much riskier for you and your finances.
Also read: 5 excellent ideas to earn extra money and from home.
2. The type of business.
If your new venture involves selling a service based on your skills, for example translations, accounting consultancies or even math classes, your start-up costs will likely be considerably lower than those who plan to sell products they must first buy.
Selling your skills will only require an investment to promote your business, but to sell a physical product you must invest in stock and also in promotion.
An internet business will always have many advantages at an economic level, which will allow you to have a friendlier start and a high probability of growing faster.
Also read: 5 compelling reasons to create a company online.
3. The teams.
Regardless of the type of business, it is very likely that you will need some type of equipment. This could be something as simple as a computer and phone, or it could mean purchasing specialized tools or machinery. Calculate exactly what you need to get started.
As we mentioned before, an internet company will only need a computer and of course a network connection. If your idea is to set up a cafe, you will have to face a much larger investment. Coffee machines, ovens and refrigerators to prepare and refrigerate additional products and at least one cash register.
Clearly, if you have an idea that requires a high investment, we do not want to discourage you, we just want you to analyze the options and make decisions according to your possibilities. Additionally, keep in mind that the team is a factor of great impact on the initial investment of your company.
4. I do everything myself or I subcontract.
If you are going to receive help from the beginning or outsource some process, you will have to take into account salaries and payment for services when calculating your initial costs.
If you want to lower these initial costs, you could join instead of paying a salary. Consider your possibilities thinking in the long term. If you partner you will have to split the profits, but the growth and performance of your business could be faster and more constant with a partner by your side.
5. Other costs.
There are other costs that you may need to think about. For example:
Although the design and configuration of a website is an activity that you can do yourself, some people are not willing to invest the time necessary to do it. Likewise, you may think that you can keep the company’s accounts yourself, and although it is not impossible, in the end, you will need a certified accountant to keep your books correctly.
Make the necessary calculations according to your business idea. You could ask friends and family for help, or you could seek outside investment through schemes like Kickstarter. To learn more about this topic read the article What is crowdfunding and how to use it.
However, if you plan to borrow money in the form of loans, consider the additional cost of paying down the debt.
Also read: How to start a business without asking for a loan.
If you borrow large amounts, you could face problems when paying the monthly payments, especially in the first months when your business is very young and unstable.
And remember that if you are really interested in creating your own business, you can purchase our book “How to create a company while working: Discover how to manage your time, manage your money and motivate yourself while creating a company and working for another” , where you will find all the information you need to found your own company, without having to leave your job.
