Calculating the startup capital

Calculating the startup capital
Anastasios Vasileiadis
by Anastasios Vasileiadis

Starting a business is extremely difficult and, for most entrepreneurs, the most challenging aspect is to raise the startup capital. Realistically speaking, most entrepreneurs have to prove their concept in front of an investor before they can put in the kind of money one needs to start a business.

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However, a business needs a certain sort of initial capital for things like marketing, incorporation expenses, inventory, supplies etc. According to SBA, most businesses in the United States fail either because it is managed poorly or have inadequate funding. Sometimes it's as simple as lack of funds for a company to close their doors.

How Does One Calculate The Startup Capital?

The startup capital for business is based on several factors including:

  • Personal circumstances of the business owner
  • Whether the business needs specialized staff, equipment or business premises
  • The time taken for startup phase
  • Whether the business allows customers credit

Startup cost would always be higher for businesses that are entering into a new sector -even if they are selling it online from the convenience of their home. Under such circumstances, there is always a learning curve involved, which adds to your expenses.

How does the startup phase influence the startup capital?

Yet another very important factor is the time taken for the startup phase. For businesses that sell consumer products, it takes more than six months until the full trade starts. If you are setting up an Internet business, you need an initial start up phase to set up a website, design it, drive traffic and convert this traffic into sales.

“With careful estimates based on sound assumptions, the chances of a cash shortfall are reduced.”

For businesses that need specialized staff and equipments will take time to source it, install it and get it functional. All this takes a lot of time - some due to legal regulations, while others due to the effort needed. Nevertheless, every business has to keep away some time for the startup phase and this drastically affects the startup capital. Unfortunately, a lot of companies do not realize this phase and start calculating from the time their operations start.

How Can iGoStartup Tools Help?

iGoStartup provides a specialized tool that help individuals to estimate and even calculate the capital needed for starting a new business venture. This particular tool will help an individual calculate the startup capital and keep up backup cash for at least six months. The initial startup cost includes one-time initial expenses of the business such as renovation of premises, sourcing of equipment, modification of layout, getting electrical work done etc.

All one needs to do is to spend five minutes of their time on this tool to get a complete market-research regarding various initial expenses that a business needs to go through during its startup. The tool does the job of providing present offers from suppliers, average electricity bills, lawyer fees etc. Thousands of entrepreneurs have benefited from using this particular tool because it is one of the most affordable ways to find information that may costs millions if done by an agency.