Making sure your business is adequately funded from day one is incredibly important for home-based and mobile businesses. Not having enough capital creates inefficiencies that can negatively impact your business right from the start. By Diane Rosenkrantz
Making sure your business is adequately funded from day one is incredibly important for home-based and mobile businesses. While you know you have fixed expenses like your franchise fee, other expenses and ongoing costs should be considered part of your initial funding needs when looking at a 401(k) Rollover, SBA Loan, or Unsecured Lines of Credit. Not having enough capital creates inefficiencies that can negatively impact your business right from the start.
Don’t Overlook These Three Areas
Marketing fees included in your franchise purchase may not include ongoing marketing costs you incur after your grand opening. When identifying marketing needs, plan for expenses like your website, advertising, business cards or flyers, sponsorship of community events or chamber of commerce membership, and promotional giveaway items, to name a few. A good rule of thumb is investing a minimum of 15% of your business’s estimated annual sales in marketing.
Closing costs for your loan should be factored into your business plan. All banks charge fees, so you need to budget accordingly and be prepared to pay roughly five percent of the loan amount in closing fees. If you use Rollover funding, there are initial set-up and ongoing administration fees as well.
Furniture, Fixtures, and Equipment (FEE) needs to be budgeted for in your initial funding package as well. Consider expenses such as a fleet vehicle for service-based or mobile businesses, office furniture, supplies, high-speed internet, accounting, or other software (like remote credit card processing, etc.)
With a little pre-planning, a business can avoid the pitfalls of being undercapitalized and be well-positioned during startup and through growth phases.
For more small business tips, visit the Tenet Financial Group blog at tenetfinancialgroup.com/blog.
– Diane Rosenkrantz
Diane Rosenkrantz has been a Senior Consultant with Tenet Financial Group for more than a decade, specializing in 401(k) Rollovers, SBA Loans, Unsecured Lines of Credit and more. Her career includes 30+ years in consulting, customer service and the pension/insurance industries. Diane can be reached at email@example.com and 413-754-3298.