How to Determine Your Small Business Startup Capital Needs for Crowdfunding

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Guest Post:  By Tara Spenser

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How to Determine Your Small Business Startup Capital Needs for Crowdfunding

Crowdfunding portals are a great way to get the capital you need to start up your new business or to release your new product. It is important to identify your goals before you begin your crowdfunding campaign so that you know how much you need to raise and how much is realistic to try to raise.

Before you do that, you have to identify what your startup capital needs are. Here are a few steps to help you to determine what your capital needs are for your new business so you can establish crowdfunding goals and get the support that you need:

Create an Inventory List

Whether you plan to sell products or services, your new business will require inventory. You will either need to order the product you plan to sell, or you will need to order the supplies to provide the service you plan to offer. Identify realistic sales prospects for the first six months to a year, then calculate the product costs and factor that into your startup capital plan.

Identify Equipment Needed

The everyday operation of your business will require some durable equipment. You may need a POS system, inventory management software, or a client database, for example. If you plan to manufacture products or to offer tangible services, you may need more equipment. All of this should be added to your startup capital plan.

Determine Regulatory Requirements

There are a number of laws and regulations to which you must adhere, depending upon the industry in which you plan to practice. You may be required to obtain licenses or to get inspections. You may be required to pay special taxes or to get special clearance before you begin operations. Not only will you have to pay fees to meet some of these requirements, but you should also meet with a professional who can give you advice to ensure that you meet all the requirements and stay out of legal trouble. All of these expenses should be factored into your startup plan.

Calculate Salaries

Many small businesses are one-man operations. However, even if you are the only person running shop, you will still need to determine a salary for yourself for at least the first six months to a year while you are waiting for your business to get off the ground and start being profitable. Then, of course, you will need to calculate the cost of salary and benefits for any employees you do intend to hire, or the cost of fees for any freelancers you want to bring on board.

There may be other costs you will need to consider -- such as a physical space for your business if you plan on working out of an office -- but these are some of the primary expenses that you are likely to face in the first year of your business. Be sure you have a clear understanding of what these expenses will be so you can properly define your fundraising goals. If you don't, you may pour your efforts into a crowdfunding campaign that falls short of your true needs.

Tara Spenser is currently the resident writer for www.workingcapital.org, where she researches the most affordable small business loans available. In her spare time, she enjoys blogging, swimming and being a mom.

Checkout an interactive Working Capital Calculator designed to assist you in determining working capital needs for the up-and-coming year.  For more information please contact Tara Spenser at taraspenser@gmail.com

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