How much money do I need to save for my new business to take off without a hitch?
If you want to get a loan, you’ll need to have a business plan. To make the business plan, you’ll have to do some research that will answer most of your questions. e.g. How many clients can you reasonably expect to have at the start and how fast is the client base likely to grow and what can you expect your average income per client to be. (In short, if you could provide us with enough info to answer the question, you wouldn’t be asking the question. 🙂 Find an organization or government agency that gives advice to people starting a business and ask for help developing a business plan. This will get you a long way.
Generally good rule of thumb for starting a business: Have enough money to operate your business at a loss for a substantial amount of time. New businesses don’t break even for between 8months and a year. So I would say you need enough money to operate both your business and your household for at LEAST 6 months. So for you that seems to be roughly 20,000usd. Although smart money would say you need double that.
E&O Insurance shouldn’t be more than $100 per month. Don’t forget business liability insurance. I wouldn’t look into a LOAN per say, but grants can work. Most grants in Oregon are for minorities or require your home/home office to be in a ‘revitalizing’ area, though… I didn’t have any success as a 25 year old white guy getting grants. Living in Eugene is cheaper if you live across the river in Springfield. The busses run to neighborhoods over there too. The general advice given to people who are starting new businesses: Figure out how much you need to live for six months, then add 20%. When you’ve saved that amount, then you can start your business. Until then, keep your day job, and do your business on the side.
If everyone followed French Fry’s advice, no one would ever start a business because in order to start a business you would already have to be pretty well off. However, French Fry is right that it often takes a while for a new business to get off the ground. This is why when people start new businesses they most often borrow money. You can look at your options for borrowing money. The lowest cost option is usually from friend’s and family. However, the low interest rate can come with other strings attached. Your partner may be able to get student loans, but unless you are married it may be difficult to convince her that she should get loans to help finance your business. There are also banks and the Small Business Administration. My main advice is to figure out how cheaply you could survive while your business was getting off the ground. You may be incredibly poor for a few months. You might also have to consider a part-time job in the evenings, while you are working to make your busin
Having just started working for myself, let me suggest finding a good accountant. I found mine through word-of-mouth and he’s made a big difference in getting me set up and conscious of how to structure things. You’ll also want a copy of Quickbooks or something similar. The little I remember from my initial convo with the accountant (I haven’t paid a dime yet, I guess he expects to make it all up come tax season): 1. The deductions around a home office (obviously) 2. Keep track of when you use your car for business 3. Consider putting your partner on the payroll, even for a small amount of work. This has multiple benefits. The one that stuck out to me was that if you need to buy your own health insurance, set it up in the partner’s name (assuming you’re married, I suppose) so it reduces your business income in addition to being an expense. Be conscious of your quarterly taxes. Have a separate business account, business credit card, etc.
