What financial issues should I consider when starting a business?
Capitalizing your new venture is an integral part of establishing a business that can grow. The following questions should remind you that you must seek both a return on your investment in your own business as well as a reasonable salary for the time you spend in operating that business.
1. How much income do you desire?
2. Are you prepared to earn less income in the first 1-3 years?
3. What minimum income do you require?
4. What financial investment will be required to start and operate your business?
5. How much could you earn by investing this money?
6. How much could you earn by working for someone else?
7. Add the amounts in 5 and 6. If this income is greater than what you can realistically expect from your business, are you prepared to forgo this additional income just to be your own boss with only the prospects of more substantial profit/income in future years?
8. What is the average return on investment for a business of your type?
As you consider these questions, you will no doubt begin to think of how you are going to obtain the funds to begin your operation. If you are like most entrepreneurs you will need to, at some point, apply for a loan. Bear in mind, your personal credit history will be a factor in determining if a loan will be granted to you for business purposes. Therefore, a good credit rating is very important.For more information about starting a business, visit here.