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Calculating business needs

accountant37004762.jpgStarting a small business is a lot of fun and very stressful. Acquiring the funding for your business can be a struggle and running the books of your business can be an even greater struggle. If you are trying to acquire funding for your business, you must start by calculating your business needs. Here are the tips you need to follow in order to calculate your business needs.

Start with your credit
To acquire a business loan you need to first start with your personal credit rating. Your personal credit has a large part to deal with your ability to acquire funding for the business. A good credit score allows you to show lenders that you have been able to manage your personal finances well and that you won't have a hard time acquiring the loan. A high credit rating will average upwards of 700 in order to acquire the loan. If you have been able to build up your business credit, this will also help you acquire the loan. Just know when you are calculating the business needs and you place them against your personal credit, it will have an impact on your credit rating that may not be favorable. Order a copy of your credit report in order to check your credit before you start applying for small business funding.

Business equipment
The next thing you need to focus on includes the type of business equipment you need. How much money is it going to cost you to purchase the equipment? Calculating your business needs is a big part of choosing the right type of lender to work with. Make a list of the amount of money it will cost in order to purchase all of the different equipment. If you cannot qualify for loans you may need to look into equipment leasing.If you are desperate for equipment, another option you have is to acquire sale and leaseback. This allows you to acquire money now and then you still have the ability to use the equipment due to the lease. Eventually you can even purchase the equipment back from the person you are leasing it from.

Borrow only what you need
A mistake a number of businesses make is borrowing too much money. You should only borrow what you need and focus on strengthening your cash flow. The cash flow is vital to your organization as it will allow you to grow and be able to purchase equipment without the need to get a loan every time. Part of calculating your business needs comes down to projecting the monthly expenses for y our business along with your monthly return. Knowing how much money you have coming in and coming out will allow you to find out how much money you can actually afford to borrow for an equipment loan.

Calculating business needs will come down to all the small details for the business. Start with the pressing needs you have right now. If you are dealing with the initial start-up costs you need to make a list of how much they cost. Here are the startup expenses you will initially deal with:

  • Inventory

  • Permits and licensing costs

  • Purchase of equipment

  • Utility costs

  • Software

  • Advertising and marketing expenses

  • Payroll

Your business will have a number of costs that you won't realize. Always project a higher amount initially and then if you have left-over funds put it back against the loan so you don't pay as much toward interest. Just make sure you have more money coming into the business than going out or you will get in trouble quickly.

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