The hardest thing to learn when starting a new business is budgeting. We don’t want to think about it, we want to live in the dream that hard work will pay itself. Eventually it will, but that doesn’t mean you shouldn’t have a clear idea of the money you have and the expenses you will have to face.
Talking money is a taboo topic in our society, for some reason. But don’t be scared, we’ve all learnt how to do it. The most important thing is being realistic and maybe a bit pessimistic. I never recommend thinking of the worst possible scenario, but when starting a business it’s better to be prepared. It will help you work out a contingency plan in case things go sour.
Sit down and make a list of the things you need. How much is a website? How much are business cards? Think of the most trivial things and add it to the list. Don’t leave anything uncovered, you will be surprised how the smallest of things can impact your budget.
You cannot operate a business if you can’t afford it. You don’t want to run out of money and have to close your business because of it. If you need a loan, don’t be afraid to ask for it, but have a realistic prospect on when you will be able to repay it. Never assume business will be good just because you’re passionate about it — sometimes, life doesn’t work that way.
How will you cover extra costs? How much can you invest now and how much do you expect to be investing in the future? Cut some costs now, if you think they don’t need prioritising. Make a list of things you will invest in once you start getting some money back. Keep it simple and true to expectations.
Budgeting is about making a list of what you need and adding the costs. There’s really nothing more to it than that. You will count your entrances once you start selling your products, and those will most likely cover some of the initial costs. But at least at the beginning, budgeting is about the money you already have and what you can afford to buy for your business.
Happy to answer questions and chat further about this! Happy Sunday folks!