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Many start-ups adopt very aggressive growth strategies. They also try and make the biggest impact they can but in the shortest space of time. This doesn’t leave you much room for vague planning or surprise expenses. At the end of the day, growth and forecasting can be daunting, and that is why this guide is going to put everything into perspective for you.
Work out your Expenses
The first thing that you need to do is manually create your budget. You can speed up the process if you use the budgeting resources that are found within your existing accounting software. A spreadsheet is the best way for you to budget everything out and it can also help you to work out exactly how much you are paying and on what. Setting an upfront budget will help you to tally up everything you “must” have and it will also make it easier for you to organise your purchases. You have to factor in an emergency fund as well, if at all possible. Some of the many start-up costs you may experience will include vehicles, security deposits, furniture and more. You also need to think about rent, your payroll and equipment, which can include everything from lifting gantry to computers or stamping materials. Break down each expense if possible. You won’t pay a fixed cost for your website for example, but you will pay for the addition of a shopping cart and your domain.
Determine your Fixed Costs
The next step would be for you to try and work out any fixed costs you have. This can include your overhead costs. These are business expenses that remain the same every month. A new company will have costs that can include business insurance, phone services, bank fees, payroll and professional services. Don’t forget to budget for things that relate to each cost either. When you have done this, you’ll need to work out your variable costs. This can include your advertising budget, your utilities and your equipment too. You may also have to work out your shipping costs and the cost of your transportation.
Calculate your Revenue
Next, you will need to forecast all of your earnings, depending on the sources of income you have. If you don’t have past sale data, then you need to create revenue projections. You need to do two types of revenue prediction here. One will need to be an optimistic projection and the other will need to be a conservative projection. If you do this then you have a good range to work within. You’ll also need to use a customer persona so you can figure out who is going to buy your goods and services, and how often. Of course, there are many things that you can do to try and make sure that you come out with an accurate number here because it will give you a good foundation to work with.
When you have your numbers, you can then work out if your budget or your income is enough to cover your expenses, so you can give yourself a higher chance of success.
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