Month: March 2018

How to estimate your start-up costs

How to estimate your start-up costs

When starting your own business, you don’t need millions to make millions. The Big Blue retail chain started as a flea market stall, while billion rand sport supplement business USN was launched from a kitchen.What you do need is a clear picture of the costs of doing business so you don’t experience cash flow problems later on. We help you work out your start-up budget to help keep you on track.

Arrange business expenses into lists

When you start a business, there will be once-off costs and continuous monthly expenses. The key thing is to look carefully at each individual expense, make an educated guess about the cost and separate expenses into the lists we detail below. After you’ve completed the items applicable to your business and guessed the amounts you’ll need, add up both lists, and the total of the two is the start-up costs you’ll need. Remember to prioritise what is absolutely necessary – i.e. electricity – versus nice-to-have (e.g. business cards).

List 1: Long-term assets

Business assets are the things you will need in your business over the long term, and also things that will retain some value. If you are offering a service, you might just need a desk, computer and website but if you are opening a store, you will need shelves, a table and a delivery van. If you are making things, list the ingredients or raw materials you’ll need. Phone around for quotes if you need to – e.g. ask rental agents about the typical monthly rent for business premises. Here are a few ideas of initial costs you will have:

  • Computer equipment

  • Software

  • Phone(s)

  • Security (gates, burglar bars, cameras)

  • Equipment

  • Office furniture

  • Start-up inventory (stock)

  • Shop fittings/signage

  • Vehicles

List 2: Your monthly expenses

Next, list everything you will need to spend every month, for 6 to 12 months. This could include:

  • Rent

  • Loan repayments

  • Electricity and water

  • Phone connection and monthly bill

  • Cellphone(s)

  • Internet connection

  • Salaries and wages

  • Website hosting

  • Equipment leasing/maintenance

  • Advertising and marketing

  • Insurance

  • Fuel (if you do deliveries or are on the road a lot)

  • Transport

  • Office supplies (stationery etc.) and printing

The good news is that you can deduct the cost from your taxable income as expenses – check with your tax advisor.

Beware of these hidden costs

Once you’ve established your start-up costs, it’s also a good idea to keep some funds aside for any surprise expenses such as:

  • Additional equipment and furniture

  • Maintenance

  • Machinery breakdown

  • Customers paying late

  • Interest charges on overdrafts

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Why Become an Entrepreneur?

Why Become an Entrepreneur?

A recent survey found that more than 70% of people want to be some sort of entrepreneur. Becoming an entrepreneur is a sought after job for many reasons, including pride, purpose and possibly money. Starting and running your own business on a day to day basis is no easy task, but it is one that is truly worth the effort.

So why should you consider becoming an entrepreneur?

There are many reasons why you should consider taking that giant step and creating your own business. Here are just a few of them:

 

  1. Autonomy– running your own business allows you to be in charge of your own destiny. It also helps you to avoid getting stuck in the “daily grind” or the “rat race”. For many people running their own business lets them have a career that is self-sustaining.
  2. Opportunity– Being an entrepreneur opens up a whole new world of opportunity for you. You will have the opportunity to do anything that you want in life. This means you can choose to spend your life changing the world for the better, or you can live the type of life you want. Few other career choices can offer this kind of opportunity.
  3. Impact- Many people who work for other companies truly want to work hard and help that company to succeed, but few are actually able to have such an impact. When you run your own business everything you do will directly impact the company, which can be very rewarding.
  4. Freedom– this is the answer most people will give if you ask them why they want to become an entrepreneur. For many people the idea of doing what they want and how they want to do is the most compelling reason to take the risk and run their own business. It is true- having freedom in life and career does make a huge difference!
  5. Responsibility– when you run your own business you have the ability to be responsible to society and operate your business the way that you feel it should be run. This is especially true if you have the desire to help others or the world in general. If you work for someone else you may not be able to improve the world the way you want to, but if you are the boss you can.
  6. Being your Own Boss– this is another common answer for why many people want to become entrepreneurs. If you are your own boss you can do things your way. You can make your own decisions, take your own risks and decide your own fate.
  7. Time and Family– depending on your specific goals in life, becoming an entrepreneur could give you the freedom of time and allow you to spend more of it with your family.
  8. Creating a Legacy- if the idea of forging a lasting legacy is important to you then few other careers give you the opportunity to do so like operating your own business.
  9. Accomplishment– if you have specific goals that you would like to accomplish in your life running your own business could help you to do so.
  10. Control– for a lot of business owners the sense of security that comes with the ability to control your own work is a major reason to become an entrepreneur.

 

What does it take to become an entrepreneur?

There are plenty of benefits of being an entrepreneur, but it is certainly no easy task to start your own business. Successful entrepreneurs, that is to say those who are able to accomplish their goals, earn a successful living through their business and enjoy the many benefits of entrepreneurship, all have specific traits. If you are considering taking the leap and following your entrepreneurship dreams then you will want to understand what these traits are so that you can instill the same traits in yourself. This will help ensure that you are able to achieve your dreams.