Starting up a small business is all in the preparation.
Sure, a great concept and truckloads of enthusiasm don’t go astray – but if you want to survive the long haul, you need to do your research above all else. Who is your target audience? How will you source new clients? And above all else, how will you finance your business?
Gone are the days of walking into the bank and asking for a loan: in 2016, there are many different options to financing a new business. There are bank loans, hire purchase agreements, chattel mortgages, and Rent.Grow.Own® by GoGetta.
It can be tricky to know which option is best for you, so we’ve put together an easy five-point checklist to consider when starting up your business.
#1: Write a list of all your costs.
Do a full assessment of your needs for capital and equipment. Whilst you might think you are across all the costs of the business, taking a moment to write it out might just prove you wrong.
For example, starting up a food truck business will be more than just the truck: you’re looking at equipment, installation, parking or storage, produce costs, staff…
Know what you’re up for in it’s entirety and avoid any nasty surprises further down the track.
#2: Figure out if you need old or new.
It’s a nice idea to kick off your small business with shiny new equipment or vehicles. But let’s face it: it’s not always necessary, or affordable. Figure out what you can source secondhand, and what needs to be purchased new.
It’s worth noting that some lenders only finance new equipment, so if you’d rather buy secondhand and save on upfront costs look to a lender like GoGetta, who facilitate buying used cars and equipment.
#3: Tackle the business plan.
We can hear you groaning from here! Business plans can be painful, but are crucial to understanding how much money you’ll need, what your repayment capacity will be, and where you should be sourcing the finance from.
Draw up a complete picture of your business finances including operations and expenses, assets and debts. How much does (or will) the business cost to run each week or month? This should include annual expenses like insurance and license registrations.
Business cash flow needs to be fairly predictable and certain before you commit to monthly or weekly payments.
#4: Gather up your paperwork.
This can often be the most time consuming part of the decision process. Gather all the relevant documents together including bank statements and your business plan. The plan needs to show projected income and how the business will service loan (re)payments.
This is important evidence for creditors that you are serious, have done the sums, and the operation is likely to be profitable.
#5: Review your options with an expert.
With all of the necessary information gathered, fork out for an hour or two with a qualified business expert or accountant. You will save time by collating your business data prior to meeting them, so you’re only paying for their advice.
Find out what they would recommend as the best option given your personal situation. A particular financial solution may work perfectly for one person, but not align with someone else.
To save you time (and money) we’ve conducted extensive research and interviewed finance experts for this guide, designed to help you ensure your business has the right financial strategy in place.