A startup will have many priorities to sort out, but before you can attempt to take your startup to the next level, you need to build a strong financial foundation for it. Without it, you will struggle to keep your business afloat. To find out how that can be achieved, be sure to read on.
Take out an SBA loan
Not every startup has the money saved up to carry out marketing, pay employees, or find a premises, so they seek out other ways such as crowdfunding, but many also turn to lenders. However, if you want to find a safe, stress-free, and straightforward form of borrowing, then you need to find the right kind of loan. In this instance, you need to consider taking out a Small Business Administration (SBA) loan.
How do SBA loans work? They cover 85% of the total borrowed amount, thus creating a lending environment where both you and your loan provider will be able to take advantage of much more favorable terms. Here are two specific ways in which this type of commercial financing can aid you in your bid to build a strong financial foundation for your startup:
- SBA loans are guaranteed, which allows business owners like yourself the opportunity to borrow money without having to worry about their funding being cut with no prior warning or explanation.
- SBA loans mitigate the usual risks associated with going all-in on businesses, which is why they instill confidence in lenders and benefactors.
Now the question remains, how much do you borrow?
Break down your startup’s needs
The financial foundation that you build for your business needs to cater to the organization’s exact needs. Before you can start catering to these needs, you need to break them down and get a better understanding of them.
Here are just a few of the necessary costs you need to take into serious consideration that could impact how much money you need to borrow, save, or gain through crowdfunding:
The wage that you pick up at the end of each month has to be factored into as one of your startup’s needs, simply because you need to earn money in order to live! Take a look at your usual spending habits, try to make cuts wherever it is possible for you to do so, and work out your minimum living expenses from there.
If you choose to operate in any location other than your home, you will need to take the cost of the workspace into consideration as well. No matter where you work, whether it’s in a small office or on a larger factory floor, you will have utility overheads to pay. It’s imperative that you keep these costs in mind when considering your startup’s needs, as your business won’t be able to survive if it doesn’t operate out of an appropriate working environment.
Will you be in the business of buying and selling goods? No matter what these products may be, you need to consider how much they are going to cost to source. There’s no point spending over the odds on products that aren’t even going to sell for a fraction of the price at a later date, which is why you must carefully consider this cost before you dive headfirst into any deals.
If you feel capable of hiring employees right off the bat, you also need to consider how much they are going to cost. Some of the things that you must take into account in this instance include your staff salaries, warming and lighting the working environment, and even feeding your workforce.