Step 5- How to estimate the capital required for your new business?

If you have read though and followed the instructions in the previous pages, you will have a good idea about how much idea you are going to need to set up and run your business initially.

When you decide how much money you are going to need, consider the following suggestions:

Avoid padding your estimates: You may ask for some money for some contingency expenses. However, do not penalize yourself by being too conservative.

Do not make the mistake of raising just enough funds to open the business without sufficient funds to operate the business: Remember, money is required to run the business and it may be months or years before the business becomes profitable.

Determine the funds needed at each stage of life of your business: For example, if you plan to initially purchase resale items from other manufacturers and not engage in manufacturing until the third year of operation, the initial funds needed won’t require production facilities.

Most investors (especially banks) will be more receptive to investing in stages as your business develops and proves itself rather than in a one-shot gamble.

Next - How to “draft” the perfect business plan? >>

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Table Of Contents

  1. How to start a company? – Introduction
  2. Is your new business idea “really” that brilliant?
  3. How to make a “perfect” business plan? & Why make one?
  4. Business plan - Step 1 – Understanding your business!
  5.             Step 2 – What do “you” want? (Personal objectives)
  6.             Step 3 – How to form business objectives? & Why?
  7.             Step 4 – How to make the “right” business decisions?
  8.                      - Making the right legal decisions
  9.                      - Making the right production decisions
  10.                      - Making the right hiring decisions
  11.                      - Making the right inventory decisions
  12.                      - Making the right marketing decisions
  13.             Step 5 – Estimating the capital required
  14.             Step 6 – How to “draft” the perfect business plan?
  15. How to raise the capital required for your business?