When starting a new business, there are many things to consider, such as affordable location, how to best market your business, services or products you'll offer, and many more. One of the most important items to consider however is what I'll discuss in my first ever blog post: working capital.
Working Capital is basically defined as the money you have available to continue operating your business. In the beginning stages of your business, money for start-up costs (which could possibly include leasing a building or office space, office or manufacturing equipment, advertising, and business cards) could be scarce - because it mainly comes from your own pockets. As I've recently began my own business as The Mobile CPA, I can tell you that unless you have some discretionary or disposable income it will be very difficult to get your idea off the ground. On the other hand, it is an extremely bad idea to borrow funds for an initial source of capital. You can quickly find yourself owing a lot of money and no revenue to repay it if your business doesn't fly.
First, determine the cash needs of your business. Make a list of necessary items and their costs. By necessary, I mean initial advertising, business cards, copier paper and ink, a computer and those items. Don't include the bright yellow Hummer with the magnetic advertising sign on the door. Once you've calculated this total, how will you get the cash?
If you don't have the cash you need for whatever reason, consider saving in a separate bank account until you do. Selling possessions can be a good way to obtain quick cash, but you should be sure it's worth the trade-off. Make sure you invest the cash you do get into those necessary items and begin marketing your business in order to obtain clients or customers. They are your source of revenue from here on out.
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