How Much Does It Cost to Start a Business: The Top 3 Funding Options

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StrategyDriven Starting Your Business Article |how much does it cost to start a business|How Much Does It Cost to Start a Business: The Top 3 Funding OptionsEvery year in the United States, about 600,000 new businesses open up.

Are you planning to join the list of entrepreneurs who will start a small business this year? Thumbs up!

However, if you’re anything like the average entrepreneur, there’s one burning question in your mind: How much does it cost to start a business?

Considering that 82 percent of businesses that fail do so because of cash flow problems, you don’t want to start your business without adequate capital at hand.

The good news? You can raise funds from other sources.

Continue reading to learn more about business startup costs and some of the top funding options.

How Much Does It Cost to Start a Business?

You’re probably expecting a ballpark figure, but that’s not how this works. Every business has unique capital demands.

As such, the amount you will need to open a new business will depend on the nature of the business, as well as factors like industry regulations and economic conditions.

For example, it costs a lot more money to start a restaurant than it costs to start an ecommerce store for selling handmade crafts. A restaurant is space and equipment-intensive, which cost tens of thousands of dollars. On the other hand, an ecommerce store owner’s biggest expense is setting up a website.

A good way to know how much your business will cost is to hire a small biz specialist to write your business plan. This professional will analyze your idea and use their expertise to make a fair estimate of the business’ capital requirements.

The Top Funding Options

Now that you know how to determine your business startup costs, let’s focus on how to raise the money. Here are some of the top funding options.

1. Business Loans

Thirty-four percent of entrepreneurs rely on bank loans for startup capital. This makes business loans a top funding option for you.

The first step to getting a business loan is to identify your preferred lender. Ideally, this should be a local bank or credit union with a reputation for making loans to small businesses. There are also online companies that specialize in offering business loans.

Although it’s possible to get an unsecured business loan, your best bet is to pursue asset based lending. If you’ve got an asset, such a car or a house, you can use the title to secure a loan. Use the money to fund your business idea.

2. Equity Investment

When you set up a business, you own 100 percent of it. Did you know you can give away a certain percentage in exchange for funding? This is known as equity capital.

However, equity investment isn’t for every other kind of business. Equity investors love startups with high growth potential.

3. Personal Funds (Bootstrapping)

If you want to retain full control of your business and not have any debt obligations, consider self-funding.
If you can raise the money you need to start your business from your savings or day job salary, well and good. But if you’re low on cash, don’t shy away from withdrawing from your retirement account or selling personal assets. As long as you’ve got a good business idea, you’ll make enough profit to refund your retirement account.

Funding Your New Business Simplified!

So, how much does it cost to start a business?

In truth, there’s no specific figure. But having read this guide, you now know the factors that will determine your startup costs. You also know how you can raise this capital.

All the best and keep reading our blog for more small business tips.

How to Improve Your Human Resources Department: 5 Key Steps to Success

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StrategyDriven Managing Your People Article |HR Department|How to Improve Your Human Resources Department: 5 Key Steps to SuccessIf you run an organization, one of the most important departments is human resources. The HR department is responsible for all aspects of your workforce, whether it be the hiring process or providing opportunities to develop for existing staff members.

When you consider employees are what keep the wheel turning, their competency and happiness are what determine if a business will succeed or fail. If your staff members don’t possess the necessary skills to do the job, this will impact overall productivity levels. If they are unhappy, they will be less inclined to work hard and may seek alternative employment.

To ensure these problems are limited, you need to maximize your company’s HR. Thankfully, this handy guide is here to help. From applicant screening software to reward programs, here are five key steps to improving your human resources department.

1. Picking the right person for the role

When in the process of hiring, every business wants to acquire the perfect individual for the job. Sadly, doing this is far from straightforward. Browsing someone’s CV and conducting an interview can only tell you so much about a person.

There are, however, certain steps you can take that will increase your chances of securing the right recruit.
This starts with pre-employment screening. With the assistance of applicant screening software, you can easily take a closer look at a potential employee’s background. You gain insight into their possible criminal record, driving history, and so much more. It also provides the ideal opportunity to analyze a candidate’s CV and see if it contains any inaccurately reported information.

The interview process should also be meticulously planned. Ensure your HR department asks all the right questions, and even plan a relatable activity to gain a better understanding of their skillset.

2. Make your expectations clear

Before the HR department brings an employee onboard, it’s important to create a set of rules that each hired person needs to follow. By doing this, you are establishing the expectations of the business from the outset.

Why is this important? Well, sometimes, no matter how refined your hiring process is, a less-than-desirable employee will be brought into your business. If they have trouble following the set rules, you have the grounds to discipline them.

3. Allow employees to grow

If a worker remains in the same position for years and years without any change, their motivation will soon start to drop. One way of avoiding this from happening is to allow your employees to learn and grow.

Your HR department should arrange opportunities that provide the chance for them to develop both their personal and professional skills. This can be done with, say, online courses or local classes.

There are two big reasons why you would want to help employees grow. First of all, your workers will have the incentive to continue to work for your business and climb the career ladder. Secondly, your organization benefits from the added skills they now possess. It’s a win-win situation.

4. Feedback and analyzing performance

If the HR department fails to keep track of your employees and how they’re feeling, this could prove to be a disastrous mistake. They might have concerns bubbling under the surface which are making them unhappy, or their performance might not be matching expectations.

While this could be done by frequently meeting with every employee, this is far from the most efficient option. Instead, specialist HR management software makes the task an easy one. Workers can communicate with ease, and the HR department can keep all information in one place.

5. Rewarding work

Employees like to feel appreciated. While this can be achieved by praising work on a frequent basis, there’s a more effective way to motivate your workforce: rewards.

Your HR department, for instance, might decide to do a weekly competition for the top salesperson. Or they may arrange a group prize for when a department completes a task on time.

These rewards don’t have to break the bank. They could be as simple as free movie tickets or a gift card but it could provide the extra encouragement to work harder.

Conclusion

Your human resources department should never be overlooked. With great HR, your entire organization will function with greater efficiency and productivity. It will also help to retain employees, which means you no longer have to continually hire, train, and familiarize workers with your business. The end result: your business saves money and becomes more profitable.

How To Use Money Wisely For Your Business

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StrategyDriven Managing Your Finances Article |Using Money Wisely|How To Use Money Wisely For Your BusinessMoney goes hand in hand when it comes to running a business. For the most part, you need money in order for your company to continue to thrive and to tick along as it may have been doing up until now. However, mistakes can be made when it comes to money, and that’s really not something you want when it comes to your business. So here are some tips for using money wisely and to give you the best opportunities to have a thriving and successful business for years to come.

Be Wary Of Risk Taking

Risks are good to take for your business, but only if you can afford to do so. There are many risks that will come by throughout the course of the company’s existence. Some will be beneficial and work the risk, regardless of whether it pays off or not and some, not so much. It’s good to have a keen eye on which ones look good and then thinking about which ones are going to be the best option for your business at that time. Turning down these risks are going to set you back any more than where you’re at now. Instead, look forward to the opportunity to get that offer again, and perhaps next time you’ll be ready to front the risks. No opportunity is worth losing your business over, so always consider the pros and cons that come with each venture, whatever that might be.

Don’t Hire Too Soon

Hiring is necessary for many businesses to do, some a lot more than others depending on where your business is currently. Every staff member that is hired needs to be bringing something new and substantial, especially when you start creating new roles too. Think about whether your company needs that extra person right now or whether it can be covered by someone who is already within the organization. They might need a pay rise or promotion, but it’s not going to be as expensive as what it would be to hire someone completely brand new and have another responsibility to pay out for as a business. Try to not make rushed decisions when it comes to recruitment because it can often happen, and that ends up being a regret which might end up affecting the financial health of it too.

Get A Loan For Big Expenditures

Loans are a good way to spread the costs of bigger expenditures for your business that maybe you just can’t afford in one go. It might be for something fairly important and an opportunity that is too good or detrimental for your business to miss out on. When getting a loan, you want to make sure you’re picking the right one and that a fast business loan is what you want and can afford to pay back. Remember that this is not your money, and therefore, you need to be careful with how much you’re asking for and how quickly you can pay it back. Loans are good for short-term borrowing, but it’s important to not get tied into something for too long that you start losing more money than you intended through crazy interest rates and hidden fees.

Invest In Quality

Quality is going to save you money because most of the time, it’s not going to let you down. A lack of quality will, and it’s good to remember this when it comes to whatever you buy for the business. Whether it be your manufacturing process and the suppliers you use or the type of workstations you have for your employees. Everything needs to be something you invest your money into because it’ll hopefully avoid you having to pay any of it back in the future. Quality won’t let you down when it’s good, and when it comes to business, you don’t want that to be something that’s happening when it could potentially affect your clients or customers. The lack of quality you have in your business as a whole, the more you’re going to find yourself paying out in the future. When you’re trying to save money, that’s not what you want to be happening.

Outsource Where Possible

Outsourcing is considered to be a popular thing for all businesses to do when they maybe don’t have the space or financials to pay for an extra person to work at the company. At the same time, it’s also good to be able to find an alternative when the task or job that’s required, doesn’t need someone full-time. You might want to consider doing this if you were thinking of hiring someone. It’s a good in-between until you find that you do need them. When outsourcing, make sure you’re doing your research to find the right companies and don’t forget to keep tabs on them. It’s important to make sure that whomever you pick, is someone you can keep up communications with to ensure everything ticks along perfectly.

Do Regular Budget Meetings

Keeping tabs on your money starts with budget meetings. These are worth being quarterly to make sure that you’re keeping up to date with everything that’s changing within the company’s departments. Budgets can change, and although some departments may stick to their budgets, others might not, and so it’s also important sign-off is something you make a thing when it comes to dealing with the finances of the business. That means someone or more than one has to oversee those big expenditures that could cost your business thousands. It’s a safety net worth having so that your accounts team are aware of any big costs that might affect the business for the rest of the financial year.

Using money in your business is something that should always be monitored as your business changes and develops. Focus on regular budget meetings and not making rash decisions when it comes to recruitment or taking risks. Outsource where you can and make sure you’re investing in quality when it comes to your business, in whatever way that might be.

4 Ways to Grab Consumer Attention

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StrategyDriven Online Marketing and Website Development Article |Capture Audience Attention|4 Ways to Grab Consumer AttentionBusinesses have a tough job on their hands when it comes to marketing and connecting with their desired audience. Research has discovered that a consumer’s brain can only process a certain amount of information before they lose concentration. Information is readily available and can be sourced by their fingertips whenever they choose. As a result, businesses are finding it tougher to engage their audiences with the vast amount of competition they’re up against.

If you’re a business owner, it’s essential you know how to capture your audience’s attention to enhance the success of your business. Here are 4 tips to keep in mind:

Avoid Prominent Branding

While the whole point of marketing is to get your brand message across, consumers don’t like to be bombarded or forced into taking action. Usually, their natural reaction is to hold back if they believe they’re being pushed to make a purchase. Within your content, take an understated approach and refrain from relying on the hard sell, which is a clever marketing technique known as ‘brand pulsing’. With this in mind, create an entertaining story around your brand and if you feel the need to incorporate your logo, ensure you keep it small and subtle to prevent distraction.

Find Out Who Your Audience Is

It’s extremely difficult to create a marketing pitch without understanding who your target market is. In order to find the right customers for your brand, you’ll need to carry out research as to who you should be targeting, based on their specific interests and needs. Some useful techniques include using Google Analytics, creating user surveys and connecting with followers on social media.

Use Video Advertising

Video advertising is becoming one of the hottest trends in marketing and boosts your chance of securing consumers by 35%. According to a study, 4 billion videos are being watched on YouTube every single day, so if you aren’t using video as part of your marketing strategy, you’re missing a trick.

Amazon and eBay are two of the world’s largest brands that have jumped on the bandwagon and have started using video advertisements to catch their audience’s attention. If you haven’t got the relevant experience to make a world-class video advertisement for your brand, it may be worth hiring a professional video production company such as Motion Giraffx to create either a 2D or 3D piece of video content to grab your audience’s attention.

Create Customer Connections

Whether you’re conducting marketing online or face-to-face, people favor businesses that take a humanized approach when connecting with their customer and clients.

Encourage your employees to have friendly conversations with your consumers, with the intention of forming a close professional connection. In doing so, you’ll help promote brand loyalty for the long term and hopefully encourage potential consumers to spread the word via word-of-mouth to their own contacts.

Your products and services have been created to satisfy a need, so play on this factor when chatting with your consumers. Express your understanding of their annoyances and how your product or service is the solution they’ve been looking for.

Top Investment Strategies for 2020

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StrategyDriven Managing Your Finances Article | Top Investment Strategies for 2020In 2020, there are hundreds of investment strategies out there. When it comes to the stock market, people have a wide range of strategies that work for them, especially if they want to earn a large amount of money. For property investment, there are two main strategies you should consider, and these are geared towards buy to let opportunities. As a potential investor looking to learn more about how to invest in property and the best strategies to take, you may want to keep reading to learn more about the property market and investment strategies that have proved successful in the past.

Understandably, you will need to choose an investment strategy according to what suits your lifestyle and financial situation at the time of investment. Do your research and keep in mind that if you’re knowledgeable in the area you want to invest in, you’re sure to reach your goal within no time. Before investing, remember that property investment is a lucrative opportunity. Still, it does come with risks (as does every investment), which means you should consider what you’re doing with your extra cash before purchasing a property.

Hands-off investment

Any investor out there who is looking for an investment which can continue making money without the added hassle of managing and organising a property, a hands-off investment may be the perfect strategy for you. A hands-off investment involves purchasing the property but allowing it to be a passive, side income which doesn’t interfere with your daily life.

Those who invest using this type of strategy often have a full-time job or a business they focus on during the day, and every so often has to consider their investment when they need to get something fixed. If you choose this strategy, you will most likely need to hire a property management company who will take care of tenanting, dealing with issues and anything else related to your property.

Hands-off investment gives you the freedom to make money from an investment without having to play an active part in the show – instead, you simply reap the rewards through rental repayments and capital appreciation of your property/unit. RWinvest specialises in the hands-off investment strategy and encourages investors to take this approach so that their investment doesn’t impact their life overall and leave them feeling stressed. Rather than worrying about your property and anything that could potentially go wrong with it, you can pay a monthly fee for someone else to sort this out for you.

Hands-on investment

The opposite of hands-off investment, hands-on investment involves playing an active role within the investment purchase and afterwards, too. Hands-on investment is when an investor becomes a property manager, landlord and everything in between. Those investors who work full-time or find themselves struggling for time to relax may want to avoid this investment strategy since it can be time-consuming. This is a popular strategy for investors who have multiple properties and make a large amount of capital from these properties. In doing so, you’re essentially starting your own property portfolio business, and leading the team! This strategy is efficient and works well for many but doesn’t always appeal to everyone, which is why you should consider what will fit in with your life the best.

About the Author

StrategyDriven Expert Contributor | Olivia HanlonOlivia is a content writer for leading property investment company, RWinvest.