Updated: Aug 24
Trying to figure out the right amount of money to save or fundraise to launch your business can really give you a headache ... especially when you're not sure how much things will cost yet.
Although I am not a financial professional, I know how deeply connected cash flow and marketing are. So, I've become savvy at budgeting and understanding how to invest in business opportunities that will provide a beneficial return on investment (ROI).
Keep reading for a few tips I've learned along the way on calculating how much money you will need to launch your business.
Tip 1: Determine how much it will cost you to run your business for a year and set that as your fundraising goal
How to do that:
Write down what you monthly expenses are to run the business according to your business plan
Think of expenses like: rent, storage fees, website fees, ad budget, printing fees, utilities, graphic designer fees, inventory costs, accounting fees, equipment investments, internet, phone, & insurance
If you don’t know how much something will cost, make an educated guess by Googling the average costs in that expense category
Multiple the number from #1 by 12 to get you annual expenses (or how much it will cost you to run your business for the next year)
Decide what percentage of your revenue will be dedicated to paying your bills (a.k.a your "operating expenses").
Many businesses spend between 30% - 80% of revenue generated to pay for operating expenses. The percentage your choose should be based on your business goals, industry standards, and/or business cost model.
Once you know what percentage of your income will go to paying expenses, divide your annual expenses by that percentage. This will tell you how much money/revenue you'll need to generate in a year to pay all your expenses and yourself. This will also be your fundraising/saving goal to start your business.
Tip 2: Explore small-business-friendly opportunities to raise funds for your business
Here are some methods to try:
Applying for grants
Business credit cards
Business lines of credit
Donations from family & friends
Drop-shipping apparel/merch fundraisers (we recommend using Printful)
Crowdfunding using Kickstarter or GoFundMe
Working a job or using gig labor (Uber, Instacart, Doordash, etc.) to save up
Make a business registry on Amazon (it may not be money, but it can prevent you for spending your money to buy stuff for your business)
Tip 3: Stay consistent with your fundraising & savings strategies for at least 3 months to begin seeing results. Consistency is key!
We hope this helps you with starting that new business! For more help with building a solid foundation for your business, please check out our free workshops.