A budget will help you determine the funds you’ll need for labour materials, how much your operations will cost and what revenue is necessary to support your company.
Drafting a business budget for your business when it’s in its early stages will help you estimate how much money you have, how much you’ll spend, and plan how much you’ll need to generate in order to stay profitable and progress.
It’s also beneficial to estimate a realistic expectation of profits and to ensure that you set the right price for the goods or service you will be selling.
On pricing, it can be tempting to undercut your competitors in order to get your ‘foot in the door’ and win new customers. How many of us have seen ‘Grand Opening Sale’ in the window of a new business?
This is a legitimate pricing strategy, but if you choose this option, it should be used with caution and for a limited amount of time. It can be difficult to convince customers to pay more for the same product or service once they’ve gotten used to a lower price. Even though your sales figures may look great on paper, it’s your profit figures that will make the difference as to whether your business is viable in the medium to longer term.
All businesses are different, so finding the most appropriate finance option is important, to be sure it suits you and your business’s needs and terms. You’ll need to consider:
- How much financial help you need
- What security you’re willing to offer in terms of personal assets and if this is something you’re comfortable with
- Whether you’d consider the option of selling shares in your company
Look at Finance and Funding your business for more information about business finance options.