How to Manage Your Business Finances by Estimating Your Costs

If you have analyzed your target markets, set up a care plan for promotion and get learned to demonstrate the benefits of dealing with your company, you will begin receiving money in exchange for providing satisfaction.

When people see that keep their promises to develop a loyalty to you and your business, resulting in repeat sales. But a word of warning: make money by selling someone is only theoretical until you collect it! There are a million reasons why someone may delay paying you. And if you are not careful, you may lose control of where your money goes once it reaches his desk.

There are five parts of an effective financial management system for small business: the estimated cost of living and a budget, making frequent projections of earnings and cash, the development of a reliable technique to collect and monitor costs operating a maintenance program for the accounting system and management of your tax situation. We will discuss the first strategy in this column.

There are many more people with good ideas that people also show discipline in managing their business money. Some say that one of the main reasons why companies is not for lack of money.

We believe it is due to the lack of money. Do not be overwhelmed. There are many ways to learn to manage their money – seminars in local schools and Centers Small Business Development, “do it yourself books, government programs and tax classes to name a few. In just a few hours per week you can create a sound system for managing your money.

Let’s look at the first step in creating a reliable system of financial management: financial estimates.

Checking your personal financial situation

Not starting with enough cash, known technically as “undercapitalized,” the research is likely not only to your business concept as a major cause of failure of small businesses. This result is generally the result of poor planning in the pre-launch.

We first need to calculate what your family and how expenses are going to ensure that your business income is sufficient to pay. You should sit down with your family and honestly discuss the minimum amount of money the family should have each month to provide security. Ask each family member to offer one or two areas where some costs can be reduced.

Besides knowing the cost of living, should also be brutally honest about your current debt situation. During the 1980s, many families are on the increase in debt in order to just pass. If the family is one of them must be realistic about their ability to assume more financial responsibility. New businesses almost always need more money to keep running the new owners estimate before starting. Remember: every dollar you have to pay each month for credit card payments is a dollar not available to invest in marketing their new business.

To help you calculate your current personal financial situation you can use the current financial situation My worksheet below.

My current financial situation

Monthly Income
Assets

My paycheck

Cash on hand

Spouse Payment
Car

Unemployment payments
Property

Other
Furniture

Total income
Other Assets

Fixed monthly expenses
Total Assets

Car
Liabilities

Mortgage / Rent
Bank Loans

Utilities
Credit Cards

Groceries
Other creditors

Other
Total Liabilities

Variable monthly expenses
Less active IABILITIES (Networth)

Clothes

Entertainment

Gas Oil

Other

Other Expenses

Insurance

Nursery

Other

Total expenses

Revenue less expenses

* “The Charge of Business”

When you look at your monthly household income, you should consider what will happen economically if left to continue the work his company full time. Their costs do not decrease much, but his income. The difference between the cost of family and household income that is not theirs can be called the “burden on business.” What this means is that unless you want your family to change radically the lifestyle, should produce enough revenue from the company to cover the shortfall between expenditure and other household income. Each month you do not produce enough sales to cover this amount, you must borrow to keep the family forward.

The estimate of business creation Costs

In addition to providing enough money to pay for his family of two to three months, you need money to pay for a variety of one-time expenditure required to set up your business. Let’s look at the typical level of expenditure required in building a new business:

Office Space
As the location of a business at home becomes more acceptable, more new companies are able to save one of the main start-up costs – rent. Renting an outside office, shop, or warehouse space results in some significant startup costs. They include:

Rent deposit, usually one month’s rent, which can range from $ 300 to over $ 1 000.

Utility deposits, with an average of $ 100 of value.

Insurance, at a cost of $ 500 to $ 2000 per year – retail stores often have plate glass insurance in general, as well as business insurance.

Installation of telephone line, starting at $ 85 per line, without any workplace within cable included.

Redecoration and refurbishment, which can sometimes negotiate with the landlord to include this in their basic rent.You usually must sign a lease for several years to get this however. This expense is $ 100 (which makes the painting) to several thousand if you must build walls and add doors and windows.

Furniture if it is necessary to locate your home office or in outer space. Most offices require a minimum of a desk, chair, lamp, file cabinet and a library or bookstore. Additionally, you may want to have a desktop computer. If you give yourself several months of searching, you can often find used furniture in house sales, bankruptcy auctions, and dealers of furniture. A little bit of painting and cleaning of furniture and can work quite well. Best plan is $ 100 – $ 600 for furniture.

Team

The rational use of electronic devices allow you to run your business from a single person as professionally as larger competitors. This is a category of expenses that pays to shop as the prices are dropping continuously.

* Telephones. Can be found at discount stores and catalogs, as well as the telephone companies. Spending plan of $ 40.00 for a single phone line and $ 60.00 for a two-line phone.

* Fax. Increasingly only one phone is not enough. Your customers expect to be able to immediately send a fax. Coated paper fax run about $ 225.00 and the normal fax paper costs around $ 500.00

* PC. Make your choice! What is a variety available. Currently some of the best offers are from Compaq and Apple. Learn what words mean the main computer and how it affects a particular feature of the speed and ease of use. Then return both hardware and discount stores to compare. And do not forget to catalog sellers like Dell and Gateway, which are excellent teams. Existence of networks used for the purchase of computers and a new chain of franchises selling PC computers called Renaissance, but it is probably smart for small businesses a new user to buy a used equipment.

* Copiers. Rarely needs a new business and are really an expensive luxury because of its tendency to break. Built with many features high-speed copiers can be bought for less than $ 2000.00.

Inventory

* Retail stores require action before they can open for business. Often, the initial stock to fill a shop of 500 square feet (25′x 20 ‘) cost over $ 20000.00.

* Manufacturers are aware of having a supply of raw materials on hand when they start so they can keep up with orders. Industrial supply and material suppliers often insist that sell in small quantities, which are larger than you need at first, but you must buy for all materials. This often results in significant costs for you.

Telecommunications

Your business requires at least one telephone line and a phone to attach to it. You may be able to get for some time with your current home phone line, thus avoiding a connection charge. However, if a line is not enough to take all calls, or if you want a second line to transmit and receive faxes, which will cost a minimum of $ 80 to connect the line. Everything within the installation is extra. Local telephone companies in your bill the amount of time at $ 60/hour.

Also consider your needs: telephone message handling, cans made out of his office and paging. An answering machine might be enough to handle calls when you are not in. But perhaps you think that the demand of its customers a real live person to answer your phone. This increases their costs up to hire a receptionist or a live service, they charge about $ 50/month. Special phone features such as call waiting, call forwarding or caller ID facility bring $ 30 – $ 40 each. Keep an eye open to offers occasional features a combination of low cost.

Cell phones are often more than $ 1 00 to install and configure and pagers often require a deposit of $ 200. These costs should be figured into the implementation of cost estimates.

Licenses, fees and permits

Common start-up costs in this category include: course name registration fees, which range from $ 30 to $ 50, rates of incorporation $ 100 onwards, the business license from $ 30, cost of health permits sometimes several hundred dollars, and state-issued cosmetology license, such licenses, which can cost up to $ 1000 per year.

Insurance

If you are starting a typical home-based services business, your renters insurance or homeowners can cover your business equipment, supplies and inventory. But it can not, so be careful at home and call your insurance agent before opening for business, to check the policy coverage. Often a small additional fee, known as the corridor, increase your home insurance to cover the team as a computer, telephone and fax. If you need a jockey, is included in addition to their $ 50 initial cost.

Stationery

To promote a professional, established image for your business, well designed and printed letterhead, envelopes and business cards done. Fast delivery of office printers and warehouse stores like Office Max and Office Depot, offer very attractive prices on the packages. For example, Office Max in Chicago offers 500 letterhead, 500 envelopes, 500 business cards and 200 bills for $ 49.95. That have limited the ink colors, paper types and styles to choose from, but this type of package you can start with a strong look at your business.

Recently introduced software programs that are present in miniature contours of letterhead, envelopes, business cards, brochures, etc. on the computer screen to guide the insertion of the sale of his own text. The pre-printed paper with 34 colors in the factory and add the black text in your computer printer.

Professional fees

If you are considering incorporating your business, they need ways of setting contract, deal with import / export, distributors want to set or require any other legal guidance, it’s better budget 5-7 hours of one-time lawyers. A good business lawyers charge between $ 95 and $ 125 per hour, it would set aside $ 500 to $ 1 000 in the initial investment for legal help.

If you are going to open a store, a wholesaler or a manufacturer that it would be advisable to consult with an accountant before launch. Support systems such businesses can be complicated. You can expect you to understand all the details. Better yet, the budget for $ 500 – $ 1000 in start-up investment to cover the fees of the accountant.

Promotional costs

The launch cost categories described earlier in this article are important in preparing for the operation of the new company. The last category, the costs of promotion, including the critical investments in securing new sales for your company.

We recommend at least to invest in design, printing and mailing of prospectuses to announce that it is in the business, what you offer, where and how to offer you. If you are experienced in using a word processing or editing program, you can design, layout and typeset your brochure itself. Having the original copy to a copy store and have run into several hundred striking paper will cost less than $ 15. Add in $ 30 – $ 50 for postage and you will have its first class in progress.

You can, of course, plan and execute much more elaborate initial promotion, everything from a grand opening of its store to a 10-city series of seminars for his consulting firm. The budgets for this type of promotion can be run more than $ 5000. The key to successful cash management here is planning ahead. 2-3 months before its official opening to allow the research to promote alternatives and their costs.

To sum it up

The total of all categories of start-up costs, you may be surprised at the total. If a team-up costs can run more than $ 7000, without any cash contribution to staff costs. Advance planning is key, because you should try to avoid borrowing money to pay the initial costs. You will have to borrow later to stay in business. Loans before you put in the hole before credit have begun to market your business.