Startups are one of the riskiest yet potentially most rewarding business endeavours. There’s not a single, universal strategy that can guarantee the success of a startup. However, by planning out your budget in detail with the following five tips, you can reduce that risk to a minimum.
1. Forming a Good Plan
The basis of every successful startup is a thought-out, detailed plan. Its main purpose is to outline your primary goal, give you guidelines on how to react in certain situations, show you the areas in which you should invest the resources of the company, etc.
The universal plan which envelops all of these aspects is called a business plan, which is either short-term or long-term. It’s a written document that, when constructed correctly, can help your startup get off the ground and even attract investors.
A good business plan should contain a development strategy, a marketing/sales overview, competitor analysis, and a financial strategy. Approach these tasks one by one, and make sure to go into the details on every single one. This way, you won’t find yourself not knowing what to do, even in some tougher situations.
2. Investigate Your Main Competitors
Knowing how to position yourself against your competitors can give you a huge advantage, especially in the beginning. However, you can’t simply visit their website and see what their plans are. Competitor analysis is a much more detailed process that requires the use of specialized tools. Some of these include Ahrefs that can be used for SEO insights and Spokeo, a reverse phone lookup tool.
Ahrefs can help you grow your search traffic by ranking higher in Google’s search results. It also has a site explorer feature that gives you an in-depth look at the backlink profile of your competitors’ website, to help you get an idea of how they’re attracting customers.
On the other hand, Spokeo is able to uncover a lot of information that would be hardly accessible otherwise. By entering the competitor startup owner’s phone number, Spokeo runs a phone number search to get everything from their full name to their social media profiles. If you’re having trouble finding their number, it also doubles as an email search tool so that you can use that parameter as well.
3. Estimate Your Expenses
During the first few months, your startup is likely not going to be profitable. You’ll need to have a large enough budget to hold out until you start seeing any revenue. Because of this, it’s highly important to calculate all the possible expenses as accurately as possible.
First, you’ll have one-time payments that will go into buying all the necessary equipment – computers, office furniture, etc, that could give you a pretty scary number, but remember to note down that they’re not recurring.
Then, your startup will have ongoing expenses for taxes, salaries, supplies, utilities (water, electricity), and others. Once you’ve determined all the factors, it’s time to do extensive research so that you can make close assessments. When you calculate the totals, it’s a good idea to have a budget that’s larger than the expenses in order to have something to fall onto in the worst-case scenario.
4. Estimate Your Monthly Sales
Even though there are fewer details that you have to count in compared to the expenses, estimated sales can be much more complex to precisely predict. While you, as a business, set a certain price, there’s no guarantee that the demand will be as high as you’d like it to be.
This is where the importance of doing the previously mentioned competitor analysis comes into play. You can get an idea of your potential revenue based on the results of the companies selling similar services/products.
The next step is to compare your estimated expenses with your estimated sales. If the former is larger than the latter, you need to go back to the drawing board. Either try to figure out the ways in which you can save, or make an effort to increase your budget.
5. Build Your Budget Through Investments
As mentioned in step four, you can give yourself more breathing room by increasing the budget. One of the best ways to do this is by attracting investors. If you’ve built a good business plan, you won’t have to go through a lot of marketing effort in order to capture someone’s interest.
Still, you’ll need to show them that you’re worth their time and money, which is why it’s important to practice your pitch. Be honest and direct with your intentions for the future.
Also, be passionate about everything that you say. When investors notice that you actually care about getting the best results possible, they won’t have second doubts about investing their money into your startup
Author bio: Maguire Haigh is a marketing manager for Spokeo. He is interested in the latest technology trends, marketing strategies and business development. He also prefers traveling, exploring the world and meeting new people. Maguire has great experience in creating and editing articles on different topics.