[Part 4] How to fund your new business (1 of 3)

      Show me the money! Learn the best ways to finance your dream. Show me the money! Learn the best ways to finance your dream.     Hey  Once you've got a great business idea and you've written out a plan, you're going to need some funds to get started. How much you need will depend on the type of business you're launching.  How much capital will you need? The amount of capital you need is going to depend on the type of business you're launching. Regardless of your business, though, your startup costs are going to fall into three main categories.  - Business expenses Your business expenses are your costs you'll incur to operate your business. To start your business, this could include things like marketing materials, legal fees, any fees involved in registering your business, website costs, salaries and office rent. - Business assets Your business assets are going to cost you money as well, but they're tangible items of value that your business owns. This could include inventory, office furniture, equipment and vehicles. - Cash reserve Your cash on hand, or cash reserve, is money you actually have sitting in your bank account. Its purpose is to help see your business through tough times. Most experts recommend a cash reserve of between three and six months' expenditure. [It can be tempting to keep a large cash reserve, but just remember that every dollar you tie up in cash is a dollar you can't use to grow and expand your business.Â](  Once you've figured out your startup expenses, startup assets and cash reserve, add these figures together and you've got the amount you'll need in startup capital. Go ahead and add 10% to this figure to give yourself a bit of a cushion in the very likely event that some costs are more than anticipated. Hey  Once you've got a great business idea and you've written out a plan, you're going to need some funds to get started. How much you need will depend on the type of business you're launching.  How much capital will you need? The amount of capital you need is going to depend on the type of business you're launching. Regardless of your business, though, your startup costs are going to fall into three main categories.  - Business expenses Your business expenses are your costs you'll incur to operate your business. To start your business, this could include things like marketing materials, legal fees, any fees involved in registering your business, website costs, salaries and office rent. - Business assets Your business assets are going to cost you money as well, but they're tangible items of value that your business owns. This could include inventory, office furniture, equipment and vehicles. - Cash reserve Your cash on hand, or cash reserve, is money you actually have sitting in your bank account. Its purpose is to help see your business through tough times. Most experts recommend a cash reserve of between three and six months' expenditure. [It can be tempting to keep a large cash reserve, but just remember that every dollar you tie up in cash is a dollar you can't use to grow and expand your business.Â](  Once you've figured out your startup expenses, startup assets and cash reserve, add these figures together and you've got the amount you'll need in startup capital. Go ahead and add 10% to this figure to give yourself a bit of a cushion in the very likely event that some costs are more than anticipated. What you'll need to get started Now that you have a good idea of how much capital you'll need, you're probably eager to start raising money. But before you jump into securing that sweet, sweet cash, there are a couple other details to get in order. After all, anyone investing in your business is going to want to know that you have a well thought out plan.  Business plan Hopefully you read our previous email on how to write a business plan. If you didn't, though, here's a brief summary of what a business plan entails:  - Value proposition: This is a summary of the solution you're providing to customers, and what makes your solution unique. - Market research: Your market research should detail demand for your solution and your ideal customer demographic. It should identify the market you'll be operating in and the opportunities in that market. - Funding: This is a summary of the funds you'll require to get started and how you plan to use those funds. - Milestones: This identifies the major milestones your business plans on hitting, and an estimate of when you'll hit them. - Resourcing: Your human resourcing should identify what roles you need to fill and profiles of the sort of staff you'll need.  This is just a synopsis, and your business plan should go into detail on each of these points.  5-year financial projections [Any investors you approach are going to want to see financial projections for at least the first three years of your business, and some may want to see up to five years.]( You should break your projections down month-by-month for the first year and then by quarter for the following years.  Your financial projection will take into account your expected sales minus your expenses. Be sure to be specific, showing how you're pricing your product or service, the number of sales you're projecting for each month or quarter and itemizing your expenses in detail.  Tomorrow, we'll look at the various ways you can fund your new business, from funding it yourself through to pitching to venture capitalists. What you'll need to get started Now that you have a good idea of how much capital you'll need, you're probably eager to start raising money. But before you jump into securing that sweet, sweet cash, there are a couple other details to get in order. After all, anyone investing in your business is going to want to know that you have a well thought out plan.  Business plan Hopefully you read our previous email on how to write a business plan. If you didn't, though, here's a brief summary of what a business plan entails:  - Value proposition: This is a summary of the solution you're providing to customers, and what makes your solution unique. - Market research: Your market research should detail demand for your solution and your ideal customer demographic. It should identify the market you'll be operating in and the opportunities in that market. - Funding: This is a summary of the funds you'll require to get started and how you plan to use those funds. - Milestones: This identifies the major milestones your business plans on hitting, and an estimate of when you'll hit them. - Resourcing: Your human resourcing should identify what roles you need to fill and profiles of the sort of staff you'll need.  This is just a synopsis, and your business plan should go into detail on each of these points.  5-year financial projections [Any investors you approach are going to want to see financial projections for at least the first three years of your business, and some may want to see up to five years.]( You should break your projections down month-by-month for the first year and then by quarter for the following years.  Your financial projection will take into account your expected sales minus your expenses. Be sure to be specific, showing how you're pricing your product or service, the number of sales you're projecting for each month or quarter and itemizing your expenses in detail.  Tomorrow, we'll look at the various ways you can fund your new business, from funding it yourself through to pitching to venture capitalists.     Do you need help financing your business? Then hire a financial advisor for some expert advice.     Do you need help financing your business? Then hire a financial advisor for some expert advice.   [Hire a Financial Advisor]( Freelancer is not responsible for financial advice provided by the independent third parties found through its website. 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