It’s no secret that starting a business costs money. It’s a bit of a gamble because you need to invest your money before you can make a profit. For many startups, it takes a long time before they even see a profit. And for this reason, a lot of startups fail. To avoid these cash problems, founders need to know how much money they need to invest in order to get their business up and running. There is no exact figure to aim for, because every startup is different from others. But here we will talk about how to determine your business startup costs. How Much Money Does Your Startup Need?It is important to be realistic when determining business startup costs. If you underestimate these expenses, they can pile up and you may find yourself overwhelmed. Things like office space, legal fees, payroll, and other organizational expenses add up quickly. You need to be honest about how much money your startup needs. It’s Okay to Start SmallEven if you have high expectations for your company, you can still start small. If it is your first time launching your own business, you need to be cautious about how you spend your money. After all, a lot of startups fail because they go too big too soon. Underestimating costs can cause your company’s downfall. Blind optimism may cause you to invest too much money too quickly—only to find out there is no demand for your product. It’s smart to keep an open mind and prepare for issues that may arise later. Always start with a healthy bit of skepticism. Understand your startup’s potential, but don’t assume that it will be successful. Businesses fail even with a solid plan and a strong product. When you’re building your company from the ground up, a million things can go wrong at any given time. Identifying Essential and Optional CostsIn order to help your startup survive those first few difficult years, you need to invest wisely. You don’t need a huge company right away. Try to identify which expenses are absolutely necessary for your startup’s operation. If it’s not needed right now, you can go without it. This allows you to invest your money on the core needs of the business, such as your product. Test your idea in a small, inexpensive way. Sell to your family and friends, and get their feedback. This will help you gauge your product or service’s potential. Find out what works and what doesn’t work before you even launch your business. If the test is successful, you can find out how much customers are willing to pay for your product. By identifying which expenses are essential and which are optional, you can properly manage your business’s cash flow, both for the short and long term. Only make optional purchases as the budget allows. Wait until you have enough cash reserves for that purchase. Another thing to consider is whether an expense is a one-time or on-going cost. There will be a lot of one-time expenses in the startup process. One-time expenses may disrupt your cash flow, so only invest in them as needed. On-going costs, on the other hand, are easier to keep track of because they don’t fluctuate much from month to month. The most common startup expenses include: rental space for an office, office furniture, labor, basic supplies, and basic technology. You also need to pay for insurance, license, and permit fees. Later on, you will be investing in advertising and promotions once you are ready to grow your business. According to the US Small Business Administration, most microbusinesses cost around $3,000 to start. Home-based franchises typically cost $2,000 to $5,000. Financial planning experts estimate that entrepreneurs need at least six months’ worth of fixed costs on hand at startup. This will help your company survive when your startup isn’t making money yet. One of the main reasons why small businesses fail is that they simply run out of cash. Figure Out Your Financing MethodsEvery type of business has its own financing needs. Project your company’s cash flows for at least the first three months. Add up the fixed costs as well as the estimated costs of goods. Also try to project your best case and worst case revenues to give yourself an idea of what to expect and whether or not you are hitting the mark. If you borrow money, make sure that you know how much you borrowed and how much interest you owe. Calculating these costs can show how much you need to earn in order to keep the business viable. It also provides a clear picture of how much you need in order to keep your business afloat. If possible, start your business without borrowing at all. Borrowing puts a lot of pressure on business owners because it leaves less room for error. Try to look for alternative funding options. How you obtain funds will affect the future of your business for years to come. You can use personal savings, ask friends and family for financial support, take out bank and government loans, secure a grant, etc. Many companies use a combination of different sources. Most startups are self-funded. Once you have established clients and customers, you can start growing your business and take out small business loans or look for angel investors who are willing to step in. Calculating your expenses and taking a cautious approach when it comes to investments can help your startup survive and begin making a profit. from https://kennected.org/how-much-money-startup/
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How Much Money Do You Need To Fund A Startup? https://t.co/6SbhXBr5R2 #kennected #linkedin9/25/2020 #kennected #linkedinautomation It’s true that you need money to start a business. And if you want to scale that business, you’re going to need more than just extra cash flow. But what new entrepreneurs don’t realize is that they can actually start small. In fact, you don’t always need a lot of capital to get a business up and running. Many people in the business industry build their momentum by starting small, building with the resources they have, and then growing from there. How to Fund a Startup with No MoneyThe first thing you need to do is take a look at your business plan and ask yourself what you can do and get for free. If something isn’t absolutely essential to your operation, you don’t need it. Not yet, at least. When you’re starting out, focus all your attention on the core needs of your startup. It’s easier to find ways to grow when you can recognize all the opportunities and resources that you do have. Stop and reflect on what you can achieve without money right now. If your plan is to sell goods, start by selling them to friends and family. This way, you can build up a reputation and see if your product is actually working. This is an effective way to get that initial feedback that will be crucial to your success. Next you can sell them on a third-party website online and see if you can attract more customers. This will also give you a clear picture of what works and what doesn’t. You can adjust your business strategies accordingly. With enough customers, you’ll eventually be able to sell your products through your own website or store. Before you go big, you want to make sure that your product or service is great and fulfills a particular need. It Doesn't Always Take (a lot of) Money to Make MoneyWhen you’re first starting out, you really don’t need that slick, custom-designed website, especially if you only have two or three products to sell. Use social networking sites like Facebook, Instagram, and LinkedIn instead. There are a lot of free resources on the internet. While you’re relying on these free resources, you can work towards finding your first few loyal customers and building up a fund for future developments. Try to build up six months’ worth of savings for expenses. Be honest with yourself about how much you’re investing and how much revenue you will likely bring in. Take into account how long it will take before you see a profit. It typically takes at least six months before founders start seeing any cash flowing in. If you do need financial support, you can ask your friends and family for extra funds. They will appreciate it if you have a good product and a solid business plan. You can even practice your sales pitch with them. Ask for feedback. When you’re ready to launch your business, ask if they can help you with a small loan to kickstart your business. Get everything down in writing and make sure to pay them back on time. Some entrepreneurs go for the crowd funding approach, which you can also try. You can encourage people around you and their networks to pitch in. If your business requires a bigger capital, then consider applying for a small business loan. Banks and online lenders offer differing kinds of small business loans to customers looking for extra cash flow or investment funds. Traditional banks can give you more favorable terms. Take your networking skills to the next level and look for potential investors. They come into play once it’s time for you to scale your business. Investors are usually among the first people outside the company to invest in a startup. There are many ways to get funds for your startup. If you start small, invest in the right things, work on perfecting your product, and increase your investments as your business grows, you can eventually turn nothing into something. from https://kennected.org/startup-no-money/ #kennected #linkedinautomation What Skill Sets Do You Need To Have In Your Startup? https://t.co/nSUekvnbOD #kennected #linkedin9/23/2020 #kennected #linkedinautomation Nobody said launching a startup would be easy. It is an unfortunate reality that most startups fail. In fact, only 50 percent of startups survive beyond 5 years, and even fewer survive beyond that. If you don’t want to fall into that category, there are certain skills you need to develop. It’s no secret that there are a million things that could go wrong when you’re starting a new business. But you can increase your chances of success by cultivating a number of must-have skill sets. Today we will be looking at some of the most essential skills for startup founders. What are the Must Have Skill Sets Startups Need to be Successful?Identifying the most important skills you need to have is the first step in getting your startup off the ground and flying. In this context, the term ‘skill’ refers to both soft and hard skills. These are qualities and technical knowledge that you need in order to produce results. Hard skills can be acquired in the classroom, or in an online course, or through training, or on the job, etc. Hard skills are teachable abilities or skill sets. These skills are easily measurable. Examples include marketing skills, IT skills, writing skills, etc. Soft skills are abilities that are not unique to any job. They are qualities that make a person more effective or productive. They may be a good communicator, a charismatic leader, or a productive worker. The skills we will talk about here cover both soft and hard skills, because out there in the competitive world of entrepreneurship, you’re going to need all of them. Managing Cash FlowLet’s start with one essential skill that will keep your startup from sinking in its first year. The reason many startups fail so quickly is because of poor cash flow management. The early years in particular will feel precarious. Cash flow challenges are common for startups. While you may be tempted to go big and spend as much money as you can right away, it is wiser to invest just a small amount in the beginning, and then spend more as your business grows. Expert entrepreneurs navigate through cash flow issues with ease by reconciling amounts and making sure they don’t fall behind on payments. Cash is king. Establish a consistent invoicing schedule and always invoice on time. Good cash flow management brings financial security, which is proportional to your business’s success. Building an Effective TeamStartup founders need to be effective leaders in order to steer their business towards the right direction. But they also need a solid team of competent individuals who can help the company achieve its goals. Building this team and hiring the right people is a skill in its own right. One effective way to build an effective team is to choose team members with complementary skills. This means they have skills that supplement the skills of their teammates. Hiring people with the skills you don’t have can benefit your startup significantly. Start slow by hiring only the most essential team members that your business needs to operate. As it grows, hire more people who can aid you in other areas. Your goal is to have members who are experts in their own respective fields, so that everyone can rely on everyone else and each member has accountability. Your team is the lifeblood of your startup, so you need to develop your team building skills. Effective CommunicationYou can’t be successful without effective communication skills. Communication problems can even cause your startup’s downfall, so don’t neglect it. Even if you have a goal and an airtight plan to get there, you still need to be able to communicate these plans effectively. As an entrepreneur, you will be talking to your employees, customers, and prospects on a daily basis. Effective communication also involves listening and taking constructive criticism. Networking SkillsBuilding a business empire from the ground up involves creating a community—and to do that, you need to be skilled in networking. Startup founders in particular need excellent networking skills if they want their business to survive the difficult first few years. It is the period in which they look for their first clients and business partners. You need to learn how to expand your network through direct communication, referrals, and using social networking platforms. As a new startup, your only sales team you have is your small team of employees. You can use their network and encourage them to promote your brand in their own social networks. You can also look for leads online. LinkedIn, for example, is the biggest online platform for professionals, which makes it the best place to find leads. Creativity and Selling the VisionStartups succeed when the founder is able to sell their vision to a wider audience. It starts with developing that vision, understanding how to get there, knowing their product’s value, and sharing it with the world. A creative founder who can sell their vision will be able to inspire their team. Vision is the vital energy needed to drive the entrepreneur. ResilienceResilience is a skill that will keep you afloat when things go bad. Even if you have the most solid business plan, things can still go wrong. And when that happens, you need to be resilient. Resilience means adapting to unforeseen developments, rising to the challenge in the face of adversity, and brushing off discouragement. You need to pick yourself up again after a setback. Setbacks are unavoidable in all lines of business, and they are not pleasant. This is why developing a startup is not for the faint of heart. To build resilience you need to stay calm and focused in the face of unexpected challenges, and not giving up. It means taking a different approach in order to solve a difficult problem. Turn your missteps into strength and you will give your startup a fighting chance to succeed in this highly competitive industry. from https://kennected.org/skillsets-startups-need/ #kennected #linkedinautomation #kennected #linkedinautomation According to a Harvard Business School study by Shikhar Ghosh, 75 percent of venture-backed startups fail. Another study says that the failure rate of all US companies after five years was over 50 percent, and over 70 percent after 10 years. These numbers only show that it is a tough and highly competitive world out there, no matter what industry you are in. If you want to increase your company’s chances of success, you need to look at the patterns, strategies, and qualities that make or break a startup. Looking at horror stories from failed startups and success stories from companies that made it will show you plenty of interesting commonalities. Here we will discuss how to set yourself up your success. What Determines Whether a Startup Will Fail or Succeed?There is a consistent set of factors that make up successful startup companies—and this is supported by research. The Startup Genome report by the Ecommerce Genome looked at 650 internet startups and identified several indicators of success. They found that startups with passionate, driven, and committed founders were more likely to succeed. In this case, commitment refers to the willingness to stay on course and stick with a chosen path. Other key factors to success include:
All of these qualities refer to the habits and attitudes of a successful leader. With a strong-willed and passionate leader, startups have a better chance of thriving. Leadership without Vision: The People PerishThe entire crew will suffer if the captain doesn’t know where to steer the ship. In fact, some of the most common reasons for startup failure are related to a leader’s lack of vision. Lack of focus, lack of motivation, lack of commitment, unwillingness to listen, unwillingness to learn, and too much pride are seen as attitudes that can drive a company to the ground. Some leaders have great qualities, but they don’t have enough business knowledge, particularly when it comes to finance, operations, and marketing. Other factors that cause startups to fail (that don’t necessarily refer to the founders) are the following: no market need, strong competition, lack of funds, pricing issues, poor product, poor marketing, and ignoring customers. Some startups fail because they raise too much money too soon. It is better to raise money conservatively and then grow as the business grows. Even though these attributes are more business-related, they can still be tied to leadership and the leader’s ability to build a strong team. Team Has Hard & Soft SkillsBuilding a startup is ultimately a team effort. If the leader has vision, but they don’t have the right team to execute their goals, their company will still fail. This is why leaders need to identify each member’s hard and soft skills. Hard skills are teachable abilities or skill sets that are easily measurable. These are the technical abilities that fit the job and produce results. Hard skills can be acquired in the classroom or in an online course, through training, or on the job. Examples of hard skills are marketing skills, IT skills, writing skills, creative skills, etc. On the other hand, soft skills are abilities that are not unique to any job. They may even be intangible qualities that a person has that make them more productive or effective. Examples of soft skills are management skills and communication skills. If a leader can utilize their team’s soft and hard skills, they can be more productive all around. You need to take the time to understand your team’s strengths and limitations because they are the ones who will help you push your company towards your goals. Kulture—Yes We Know It’s with a “C”Knowing where you want to go and how to get there makes a good leader. Understanding how to leverage your team’s strengths to get the best results will get you on the right track. But developing a healthy workplace culture is what will solidify your team into one coherent working force. “Culture eats strategy for breakfast,” said the late business management guru Peter Drucker. Workplace culture is about operationalizing an organization’s values. It’s about putting your values to work. Culture guides employee decisions including their technical needs and plans, and how they interact with one another. Kennected, for example, has a culture of innovation and fun. It inspires the team to come up with creative solutions to problems. It even encourages members to come up with new ways to create value for customers. It is true that culture happens whether you want it to or not, but it is important to develop a culture that reflects the company’s values. It is the DNA of the company, and it is largely influenced by its founders—not by their words, but their actions. Proper workplace culture, vision, and teamwork: these are the factors that drive a startup towards success. Without these things, companies can fail and become a part of the terrible statistic that plagues most startup companies. But if you develop a solid business plan, build the right team, and develop an effective culture you can significantly improve your chances of succeeding in this highly competitive market. from https://kennected.org/what-makes-startup-successful/ |
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