Financial Start-Up Needs for a Business
Launching a credit repair firm from scratch takes a lot of preparation and effort. I will describe the requirements and the basis for my projections. We will examine the money, tools, offices, supplies, licenses, and permissions.
The first is that lack of money is not a cause to refrain from starting a business; other solutions are available, like grants, loans, GoFundMe campaigns, and simple borrowing from family and friends. The money will let me buy little things and act as a safety net while waiting for a paycheck. I will need roughly $5,000 to get started, but I will apply for business credit and use that to buy tools, supplies, office space, etc.
Since you write letters to be mailed to the bureaus and contact your clients on a computer, laptop, or desktop, having one is necessary for running your business.
Computers speed up repetitive activities, increasing corporate efficiency. I will put the cost of a decent laptop at around $1,500. I would rent a home with an office already set up with a desk, chairs, phone, internet, and copy/print station. I will not be able to buy those products outright because of this. That system should cost about $700 a month, in my opinion. Additionally, I would save a lot of money by not having to pay utilities. I will likely only be responsible for the price of printing and shipping.
The cost of the office space, which is now $99 a month, will not include the cost of the software needed to execute my program. Postage will vary depending on the weight of each letter, but it is typically $1.49 per envelope. Licenses and permits exist in my town.
$200 a year. At this point, there will only be working, which reduces labor costs; I conservatively project that after six months, I will be paying myself at least $1000 a month.
Cash on hand is the first thing to do. Grants, GoFundMe campaigns, loans, and simple borrowing from family and friends are additional methods for raising money. After all, there needs to be more funds to start a business. The money will let me buy little things and act as a safety net while waiting for a paycheck. I will apply for one of the above choices, and in the interim, I will apply for business credit cards and business lines of credit to purchase the software and other products not included in the office space. I will use my credibility checklist to ensure that my business is set up as credible in the lender’s views before applying the business lines. Since the start-up cost of this firm is so minimal, I will assume that I will need roughly $5,000 on hand to get started. I will not use it all simultaneously, but it will provide a safety net for lean times.
Despite the best efforts of investors, there is only one perfect way to assess a company’s financial stability, much less its sustainability. However, four crucial areas of financial security can be closely examined for indications of strength or vulnerability.
The four factors to consider are liquidity, solvency, profitability, and operating efficiency. Although each of the four factors is vital, profitability is the most important indicator of a company’s financial health. I can determine whether the company’s performance is lucrative by looking at the financial numbers. (1)
You can utilize them to give insight into how my firm is performing right now compared to its performance in the past, from the most recent quarter to years ago. They will also aid in identifying issues that require resolution. It can even draw my attention to possible issues that can be avoided, which is even better. Additionally, I may utilize these ratios to make decisions by evaluating how my business performs compared to its rivals or other participants in my industry.
Remember that the ratios you will be computing are just meant to display general patterns and, thus, to assist you in making decisions. They only need to be accurate enough for you to use them. Calculate ratios to up to one or two decimal places to avoid getting bogged down. Almost definitely, a movement measured in tenths of a percent will not imply anything. Verify your math, but take your time with it. (2)
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The Basics of a Start-Up
This assignment investigates the financial needs of your business venture from the first assignment, Your Business Venture.
Write a 2-3 page paper in which you:
- Outline the financial start-up needs for this business. Consider cash, equipment, space lease or purchase, raw materials, and labor costs. Provide a rationale for your estimates.
- This is only a preliminary list. As you progress in the course, this outline will be fine-tuned.
- Once you have estimated the start-up needs for this business, determine the best financing options to obtain the needed capital and how you would approach securing this type of financing. Justify your selection.
- Evaluate the two most important financial ratios you will use to track the business’s health and explain how each would provide insight into the business’s performance. Provide a rationale with your response.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.
The specific course learning outcome associated with this assignment is:
- Determine financial start-up needs for a business, options, and approaches for securing financing, and financial ratios for tracking business performance.
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