Your financial needs will vary significantly depending on the type of business you plan to start. You’ll want to create a proposed budget, as well as financial projections, to make sure you’re financially prepared and to pitch to potential investors and lenders.
Create a budget and financial projections
Before starting your business, you need to confirm that there will be enough income to be sustainable. You will also want to estimate how long it will take to generate a profit and what the projected profits will be. For example, a service-based consulting business is likely to have very few start-up costs, but a product-based business, such as a hotel business that you run from your home, may have more start-up costs.
Financial projections are estimates of how much money the business will earn and spend over two to three years. If you plan to take out a loan or other financing, potential lenders and investors will likely want to see your financial projections so they have a clear understanding of when they will see a return on their investment in your business. . You can create your own financial projections or find a template to use, such as those available in Microsoft Excel.
Develop a plan to keep track of your finances
Getting your finances in order also includes considering how you will process and record your sales, expenses, income and earnings once the business is up and running. There are several third-party providers that can help with merchant account services, and we’ve listed the best options for small businesses here.
Open a business bank account
Opening a business bank account helps keep personal and business income and expenses separate. Using a business bank account can make it easier to track and record business income and expenses for accounting and tax purposes. You can open a business bank account at your local branch. You may also want to consider getting a business credit card as well. Get step-by-step instructions on how to open a business bank account.