Masterclass

Money talks for start ups

Published on May 4, 2015 12:53 pm, by

The life of a start-up is an exciting one, full of ideas, enthusiasm and belief. There’s plenty of hard work too, as you soon realise it is up to you (and only you) to make it happen.

As well introducing an amazing concept (and convincing everyone that it’s equally awesome), aspiring entrepreneurs must experiment with their ideas, build a business plan and develop relationships before they invest too much drive – or dollars in their great idea…

Which is where we think we can help you… because it is no fun living the life of a broke start up, or being side-swiped by an unexpected bill.

You see, despite impressions to the contrary, not every entrepreneurial idea will eventuate in Richard Branson level riches. In fact, according to Business Insider Australia only a slim 7% of people wishing to launch their own business will actually succeed.

One way to get ahead of the game is to make sure your financial well-being is looked after, so you can reserve all your energy building that great start up, instead of worrying about money.

Here is the first in our series of blogs to help anyone considering going it alone.

The money talk you need to have with yourself …….

How much does it cost to be you?
Before becoming a start-up it makes sense to calculate what you need to live on and how much money you have behind your business.

Working out how much money you need, will make it that little bit less stressful when you’re waiting for that first product to sell or invoice to come through while you keep your lovely picket-fence house from being repossessed or the landlord at bay.

Now don’t freak out, but you’re going to have to do two budgets. One for your life and one for your business. Let’s start with your personal budget first.

Now’s not the time to give yourself a pay rise
As the business owner, you have the responsibility of determining your own salary. And while in theory this sounds like a spectacular opportunity to give yourself a much deserved pay rise, there are a few other factors to consider first.   Here is how to go about it…

  1. Work out how much you need
    Put together a list of everything you need to pay for, including your rent or mortgage, car payments, car insurance, health insurance, credit cards with outstanding balances, gym membership, going out and grocery bills etc.
  2. How much do you need to run and launch your business idea?
    Go in with your eyes open, think of all the costs involved so you know what you are in for. These include: registering a company, an ABN, PO Box, setting up an office space, website, promotional materials (marketing), production costs etc.
  3. How much savings do you have behind you?
    How would you feel if you lost it?
    Most successful start ups have already saved 1 to 2 years worth of living expenses so they don’t have to worry about an income coming in straight away. Have you got that amount behind you?
    How much time can you dedicate to building your business before you are broke? Do you feel comfortable taking money out of your savings while you are in the build stage of your business?

Planning your personal budget,  then setting out your business one (part 2 is coming soon) will increase your odds of achievement and ensure you successfully mix business with pleasure!

We love this piece of advice from Ali Hodges, a former finance industry project manager who launched Ali Hodges Events a wedding and event planning company).

“I thought the only thing I could lose was a bit of money, but I had much more to gain if it took off. You doubt yourself but the only way to get past that is to try and not be scared and just go for it. Deal with each matter as it arises.

When someone asks “How do you eat an elephant? My response? “One bite at a time.”

Read Part 2 here

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Believes in the importance of living life financially well so you can experience more in life.

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