Basic Investments That Every Startup Company Will Need

Whether you’re starting a new business from scratch or already have a successful business, there are certain basic investments every startup company needs. The first is a website. This is a critical component of a startup’s business plan. However, your website can’t be complete without an effective marketing strategy. Having a marketing strategy is the first step to establishing your brand and ensuring customers will continue to come back.

Next, a business valuation. If you plan on selling your business in the future, you’ll need to show potential investors the value of your business. Investors aren’t interested in a one-person company unless they believe in the idea’s potential. Even a one-man startup must convince people that they’re a valuable business and that it will grow rapidly. In order to secure investment from a large group of investors, your business plan should also show how it will grow over the next few years.

Renting an office space is a significant fixed expense. Renting an office or retail space can cost up to $1,000 per employee per month. In addition, installing and maintaining an HVAC unit costs a few thousand dollars. Payroll costs vary from startup to startup. The average cost of one employee is approximately 1.25x to 1.5x salary. Therefore, if you hire someone earning $40k per year, you’ll have to pay $54,000 or more in payroll costs.

Once you’ve received seed funding, you must manage the equity that you’re obtaining. You’ll need a capitalization table to calculate the value of your startup, which will help you determine how to obtain more funding if your business grows. A capitalization table shows the total equity ownership capital in a startup, including individual investments and share prices. The table will also show how many shares an investor owns.

You’ll also need to budget for a payroll budget. You may be working as a sole proprietor, but you’ll need to keep in mind that you’ll probably be hiring 1099 contractors. While a DIY approach may be tempting, partnering with an expert in the field is well worth the money. A certified public accountant can help you understand the different legal structures, determine the best employee benefit programs, and prepare tax returns. In addition to making the process simpler, a certified public accountant will also help you save money on taxes.

Funding your startup requires a series of investment rounds. The first two rounds are known as seed funds. During this phase, a startup is in its prototyping phase, which means it doesn’t yet have any positive financials or performance data. Seed investors typically invest in a company based on the strength of its idea and its team. These initial rounds are often financed by family, friends, or personal loans.

A loan is also essential, as most businesses are unable to raise capital on their own. The Small Business Administration has a program where it connects startups to private lenders. Its program provides loans up to $50,000 to entrepreneurs, and many microlending nonprofits offer smaller amounts, typically in the range of $12,000 to $13,000. It’s best to seek out financial advice from a financial advisor before putting your company’s future in their hands.


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