In the previous article we discussed how to estimate your startup capital needs. Having adequate financial resources to fund your equipment and startup expenses can make the difference between the success and failure of your business. Making unrealistic assumptions about finances is a very common mistake that new businesses make. It is foolish to just assume everything is going to work itself out. This seldom happens. Almost all successful businesses were backed up by a good plan and adequate financing. A simple process of estimating your capital needs ahead of time and planning on how to fund them can eliminate a lot of headaches later on as your business begins to grow.
Capital requirements for a sign shop are relatively small so raising the capital needed is not an impossible task. Personal savings is best but short term financing is normally adequate if you must borrow. A personal note, a credit card or a home equity loan are suitable ways to capitalize your business through debt. If you plan to start a larger company that will have larger financial needs, you will need to find larger financial resources. Three options are bank financing, a partner, or a venture capitalist.
Make sure to set aside enough money in your business account to pay business related bills for several months while you work to turn a profit. Also, make sure you have adequate personal savings to pay your household bills until your company can start paying you. Keep in mind that this can take several months and even then you won’t be drawing a huge paycheck. It will be a gradual process. Planning ahead can keep surprises to a minimum.