How Much Does It Cost to Start a Business: The Top 3 Funding Options

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StrategyDriven Starting Your Business Article |how much does it cost to start a business|How Much Does It Cost to Start a Business: The Top 3 Funding OptionsEvery year in the United States, about 600,000 new businesses open up.

Are you planning to join the list of entrepreneurs who will start a small business this year? Thumbs up!

However, if you’re anything like the average entrepreneur, there’s one burning question in your mind: How much does it cost to start a business?

Considering that 82 percent of businesses that fail do so because of cash flow problems, you don’t want to start your business without adequate capital at hand.

The good news? You can raise funds from other sources.

Continue reading to learn more about business startup costs and some of the top funding options.

How Much Does It Cost to Start a Business?

You’re probably expecting a ballpark figure, but that’s not how this works. Every business has unique capital demands.

As such, the amount you will need to open a new business will depend on the nature of the business, as well as factors like industry regulations and economic conditions.

For example, it costs a lot more money to start a restaurant than it costs to start an ecommerce store for selling handmade crafts. A restaurant is space and equipment-intensive, which cost tens of thousands of dollars. On the other hand, an ecommerce store owner’s biggest expense is setting up a website.

A good way to know how much your business will cost is to hire a small biz specialist to write your business plan. This professional will analyze your idea and use their expertise to make a fair estimate of the business’ capital requirements.

The Top Funding Options

Now that you know how to determine your business startup costs, let’s focus on how to raise the money. Here are some of the top funding options.

1. Business Loans

Thirty-four percent of entrepreneurs rely on bank loans for startup capital. This makes business loans a top funding option for you.

The first step to getting a business loan is to identify your preferred lender. Ideally, this should be a local bank or credit union with a reputation for making loans to small businesses. There are also online companies that specialize in offering business loans.

Although it’s possible to get an unsecured business loan, your best bet is to pursue asset based lending. If you’ve got an asset, such a car or a house, you can use the title to secure a loan. Use the money to fund your business idea.

2. Equity Investment

When you set up a business, you own 100 percent of it. Did you know you can give away a certain percentage in exchange for funding? This is known as equity capital.

However, equity investment isn’t for every other kind of business. Equity investors love startups with high growth potential.

3. Personal Funds (Bootstrapping)

If you want to retain full control of your business and not have any debt obligations, consider self-funding.
If you can raise the money you need to start your business from your savings or day job salary, well and good. But if you’re low on cash, don’t shy away from withdrawing from your retirement account or selling personal assets. As long as you’ve got a good business idea, you’ll make enough profit to refund your retirement account.

Funding Your New Business Simplified!

So, how much does it cost to start a business?

In truth, there’s no specific figure. But having read this guide, you now know the factors that will determine your startup costs. You also know how you can raise this capital.

All the best and keep reading our blog for more small business tips.

Top Investment Strategies for 2020

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StrategyDriven Managing Your Finances Article | Top Investment Strategies for 2020In 2020, there are hundreds of investment strategies out there. When it comes to the stock market, people have a wide range of strategies that work for them, especially if they want to earn a large amount of money. For property investment, there are two main strategies you should consider, and these are geared towards buy to let opportunities. As a potential investor looking to learn more about how to invest in property and the best strategies to take, you may want to keep reading to learn more about the property market and investment strategies that have proved successful in the past.

Understandably, you will need to choose an investment strategy according to what suits your lifestyle and financial situation at the time of investment. Do your research and keep in mind that if you’re knowledgeable in the area you want to invest in, you’re sure to reach your goal within no time. Before investing, remember that property investment is a lucrative opportunity. Still, it does come with risks (as does every investment), which means you should consider what you’re doing with your extra cash before purchasing a property.

Hands-off investment

Any investor out there who is looking for an investment which can continue making money without the added hassle of managing and organising a property, a hands-off investment may be the perfect strategy for you. A hands-off investment involves purchasing the property but allowing it to be a passive, side income which doesn’t interfere with your daily life.

Those who invest using this type of strategy often have a full-time job or a business they focus on during the day, and every so often has to consider their investment when they need to get something fixed. If you choose this strategy, you will most likely need to hire a property management company who will take care of tenanting, dealing with issues and anything else related to your property.

Hands-off investment gives you the freedom to make money from an investment without having to play an active part in the show – instead, you simply reap the rewards through rental repayments and capital appreciation of your property/unit. RWinvest specialises in the hands-off investment strategy and encourages investors to take this approach so that their investment doesn’t impact their life overall and leave them feeling stressed. Rather than worrying about your property and anything that could potentially go wrong with it, you can pay a monthly fee for someone else to sort this out for you.

Hands-on investment

The opposite of hands-off investment, hands-on investment involves playing an active role within the investment purchase and afterwards, too. Hands-on investment is when an investor becomes a property manager, landlord and everything in between. Those investors who work full-time or find themselves struggling for time to relax may want to avoid this investment strategy since it can be time-consuming. This is a popular strategy for investors who have multiple properties and make a large amount of capital from these properties. In doing so, you’re essentially starting your own property portfolio business, and leading the team! This strategy is efficient and works well for many but doesn’t always appeal to everyone, which is why you should consider what will fit in with your life the best.

About the Author

StrategyDriven Expert Contributor | Olivia HanlonOlivia is a content writer for leading property investment company, RWinvest.

3 Lowest Cost States to Start an LLC

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StrategyDriven Starting Your Business Article | 3 Lowest Cost States to Start an LLC | Incorporation

When you are starting a business, you have to make every dollar count. You may have no idea how much revenue you will bring in at first – and you know you are going to have to work out some kinks before your business becomes more stable. So, it makes sense to try to find the lowest cost state to form your LLC. Of course, there are multiple ways to measure “lowest cost” when it comes to forming a business. Are we talking about which state has the lowest LLC formation fees, or are we talking about which state is the most affordable to do business in?

There are many states that try to make doing business affordable, from Texas to Florida and throughout the country. But there are some that try to go the extra mile, either by making taxes extremely low, licenses and filing fees low, or both. Since you may have your own idea of what “affordable” means, we will examine this question from two angles. First, we can look at which three states are best for overall affordability for business, then we will take a quick look at which three states have the lowest LLC formation fees.

3 Most Affordable States to Form an LLC

1. Wyoming

The state of Wyoming does a lot to make starting a business as easy and attractive as possible. For one thing, it has a 0 percent corporate tax rate and a 0 percent individual income tax rate. That’s right, you don’t have to worry about paying either corporate state tax or individual state income tax. You will still be hit with federal taxes, but Wyoming is easy on businesses as far as taxes go. The effective property tax rate is also extremely low – at .61 percent. When you consider that the average property tax rate in the country is 1.19 percent, the affordability of the Wyoming tax system is readily apparent.

The sales tax rate in Wyoming is also quite low at 4 percent. That means your customers will not be as likely to experience sticker shock when they buy products from you since the sales tax they see will not be too high.

2. Nevada

Nevada is another one of the most popular states to form an LLC because it offers multiple tax advantages to businesses that make the state home. Just like Wyoming, Nevada has a 0 percent corporate tax rate and a 0 percent individual income tax rate. Your business won’t have to pay corporate state taxes and you won’t have to pay state income taxes. Again, you will still face federal taxes, but every little bit helps. The effective property tax rate in Nevada is also extremely low at .77 percent.

The sales tax rate in Nevada is higher than Wyoming at 6.85 percent.

3. South Dakota

South Dakota also strives to set itself apart as a business haven by making its taxes quite low. You will find a 0 percent corporate tax rate and a 0 percent individual income tax rate in the state and an effective property tax rate of 1.32 percent. So, it can be more expensive to own property – like your brick and mortar store – in South Dakota than Wyoming or Nevada – but if you don’t own property in the state then the property taxes are less of a concern for your business.

The sales tax rate in South Dakota is 4.50 percent.

Cheapest LLC Formation Fees

If you are just looking for states with the lowest fees for forming an LLC, you should consider the following locations:

  • Arizona. You only have to pay $50 to file your LLC formation documents in Arizona. Even better, there is no annual fee and no report due each year.
  • Missouri. The fee for filing in Missouri is higher than some other states at $105, but you don’t have to pay an annual fee each year nor do you have to file a report. That makes Missouri quite low to form an LLC in over the long-term.
  • New Mexico. The fee for filing an LLC in New Mexico is only $50 and there is no annual fee and no report due. That makes New Mexico just as affordable as Arizona.
  • Kentucky. The state of Kentucky has the lowest filing fee of any state in the country. They only charge $40 for you to file. However, they do expect you to pay $15 every year to keep your LLC official with the state.

Where Should You File Your LLC?

When you start looking more closely at your options for forming an LLC, you realize that there are plenty of different states that offer attractive deals. Some are extremely affordable to do business in and others make it very cheap to file your LLC. So, what should your main priority be?

The answer is, “It depends.” Deciding where to form your LLC is a personal decision that needs to be made based on what is most important to you. For absolute convenience, there is probably nothing better than forming your LLC in your home state. That’s because it is often simpler to handle paperwork and deal with government entities when you can go down the street to do so. But if you want to save money on filing fees or gain tax advantages, you may want to consider forming an LLC in a state that offers you the most of what you want for your business.

3 Essentials For Your Start-Up

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Every day there are hundreds of new start-ups getting ready to launch. It has never been a more perfect time to test your ideas than now.

StrategyDriven Starting Your Business Article | Entrepreneurship | 3 Essentials For Your Start-Up | Start-up

Entrepreneurship, owning a small business, or even going freelancing, is exciting and has never been more possible than it is now. There are a few key things that you should have in place before you launch a start-up, or at the very least, consider the implications for your business.

There is almost nothing that you can’t have as a service right now, from cloud solutions to fax from email. All of these things will make running your business easier and more manageable.

You can set almost anything up from the comfort of your own home, or if you prefer the local coffee shop. You don’t even necessarily need more than a few hundred dollars or less. Here are some essentials that you should consider.

Team

While you might be starting a business entirely by yourself, or simply freelancing, you still are going to need a team. It is important to note that this team could be a list of incredible tools to help you do your job better.

Or it could be things like a virtual assistant, managed IT, or other friend answers that have skills that you don’t. This will allow you to take on much bigger jobs earlier on. Are you likely to know a few people who fit the bill, so have a chat earlier on and see if they would be prepared to get involved with projects that much their skill sets.

Project Management

You are going to be in charge of all of the projects. Until that is, you reach such a point where you need a project manager to help you stay on track. Luckily there are plenty of online project management tools that can help you manage a team of freelancers, schedules, timekeeping, and even invoicing. Some of them provide much of the services for free.

You’ll need to decide what really suits what you’re doing. When it comes to taking things like meetings, you can do this via Skype and FaceTime. Many of these tools are free or offer a free limited option,  which means there is no excuse for ducking a meeting.

Online

The very basic of letting people contact you, see your portfolio, learn more about you will be your online presence. The first thing you want to do is claim a domain name. Try to use something easy to remember, relates to your business, can also be used on Facebook, Twitter, Instagram, and other social media sites.

You can typically purchase a domain name from the same place as you intend to have your website hosted. You may decide you do not need a full website package because you can build a website yourself. This is entirely possible with some of the easy-to-use drag-and-drop options or the 1-Click installs from WordPress.

Try to ensure that when you purchase hosting and domain name, you also have email inboxes, support, and access to your Cpanel.

Having all of the basics like these, your tools, your website, and some people in mind that you can work with will mean that you are more likely to start off on the right foot. Laying good business foundations will keep your business stronger through shaky times. Entrepreneurship, freelancing, and small business ownership is exciting but deserves planning and time.

How to Start Your Very Own Baby Business and Store: A Useful Guide

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StrategyDriven Starting Your Business Article |baby business|How to Start Your Very Own Baby Business and Store: A Useful GuideLet’s face it: with a predicted market value of almost $17 billion by 2025, baby businesses are booming. Thanks to the rising demand in infant hygiene and nutrition, researching “baby stores names” is more trendy than ever.
Do you spend your day googling “selling baby clothes online business?”

If so, you’re in business baby. From creating a baby store name to selling baby products, read our handy guide to starting your very own baby business store!

Planning out Your Baby Business

If you want your baby company to be successful, you’ve got to start with a successful plan. Not only will this plan help you to identify your target market, but it will also leave room for the unknown.

For instance, start by asking yourself what your ongoing and startup costs will be. Think about who you’re marketing your products to.

Another important thought is: how long will it take for your business to become profitable?

Of course, figuring out what the perfect startup business name is will be crucial too. Fortunately, we’ve done all the hard work for you. Let’s talk about how much it costs to start a baby business.

Whether you’re starting on your own or buying a franchise, investing in a brand-new baby store is a big deal.

You’ll need money for everything from:

  • Purchasing or leasing a storefront
  • Fulfilling inventory orders
  • Hiring staff members
  • Buying point-of-sale systems
  • Acquiring accounting devices
  • Obtaining display racks
  • Paying for living expenses

In a nutshell, you’ll need anywhere between $250,000 and $500,000 to begin your baby business.

Expect for employee payroll to be your biggest expense. On top of that, keeping enough inventory in stock is expensive as well. Also, maintaining computer systems and your business property will be your third largest expense.

Now, your target market should be anyone who:

  • Is expecting to have a baby
  • Already has a baby
  • Knows someone else with a baby

Keep in mind that budget-friendly stores are much more in demand than upscale boutiques. To make money, you have to buy your baby products at a discount rate from a wide range of distributors and manufacturers.

Earning a profit will be as simple as reselling your wholesale products at a standard retail rate.

How convenient is that?

Creating a Legal Baby Company

When it comes to creating a legal company, it’s all about playing by the rules. For those of you are planning to form an LLC, this will prevent you from being held responsible if your baby business is brought to court. If LLCs aren’t your thing, consider forming a DBA or a corporation instead.

Finding a registered agent website will help your business safe and compliant. The next step is to register your business to file federal and state taxes every year. To do so, you’ll have to apply for an employee identification number.

Luckily for you, getting an employer identification number is both free and easy to do. Visit the Internal Revenue Service website to obtain an employer identification number via mail, fax, or online.

Here comes the fun part: opening up a new business credit card and bank account for your company. In case you didn’t know, this is the best way to keep business and personal accounts separate. Otherwise, your company could be sued for your personal assets if it’s taken to court.

If you want to separate your company’s assets from your personal assets, the tax and accounting process will be much easier. Plus, adding a company credit card to the mix to be a great way to build credit for your business too. This is a good time to establish your company accounting records as well.

FYI – keeping detailed and accurate records will make filing your annual taxes way less stressful. It also helps tremendously if you know your tax bracket and the resulting implications. After you’ve made sure that your business is legit, you’ve got to get your hands on the necessary licenses and permits for your company. If not, your baby business could get hit with fines or closed down.

Nobody wants that, right? We didn’t think so!

Following Local & State Regulations

If this is your first rodeo, then you should know that following the local and state regulations for your baby store is your number one priority. To find out what the laws are in your area, contact the Small Business Administration to learn more.

Also, checking in with your county, city, or town clerk’s office is a smart idea too. Now that we’ve got that covered, most baby businesses have to charge a sales tax on their services or goods.

What is a Certificate of Occupancy (CO), you ask?

Fair question. If you’re planning on running your baby business out of an official storefront, then you’re definitely going to need to get a CO. This will let everyone know that you’ve met the necessary requirements for regulations, zoning laws, and building codes.

For those of you who are intending to lease a business storefront, know that it’s your job to acquire a Certificate of Occupancy. Before you sign the lease, ask your landlord if you are allowed to get a Certificate of Occupancy for your baby business.

That being said, make sure that you renew your CO whenever you plan to do a renovation of your store. If these renovations occur before your opening, tell the landowner that you won’t start making payments until you receive a CO.

What’s the real deal about building or purchasing a baby store location?

Similar to leasing a baby business, it’s your responsibility to obtain a CO from local authorities or officials. The last step in this process is to get reliable insurance for your company. This is an essential part of becoming a business owner.

Planning to hire staff members means that you’ll have to pay for worker’s compensation too!

Building Your Baby Brand

Chances are that you been thinking about building your baby brand for years now. For the uninitiated, your baby brand will reflect your company’s mission, goals, and overall vibe. Yes, that includes how your brand is received by your target audience.

But wait – there’s more. Building an iron proof brand will help you to leave your competitors in the dust. To market or promote your baby products, put your brand and company name in any place that expecting or new parents would visit, including:

  • OB/GYN offices
  • Pediatric offices
  • The civic center
  • Gyms
  • Daycare centers
  • The local library

Launching a direct mailing campaign can reach families that are already looking for baby products or services. Establishing a blog with baby tips is helpful as well. Better yet, make a social media profile to connect with new or expecting parents in your region.

Investing in newspaper ads or placing ads online is another smart marketing move. That way, you’ll be able to snag as many future clients as you can.

But here’s the catch: how do you keep consumers coming back from more?

Surprisingly, the answer is simple. Your baby store opening should be as exciting and fun as possible. To take it up a notch, you could always:

  • Rent a jump house
  • Hire clowns
  • Find a face painter
  • Have a snack station

In addition to this, offering customer specials at the door will encourage customers to check out your fun and beautiful business.

For the next year, running bargains will be a great way to help you build up your clientele too. Continue to offer excellent customer service and competitive prices.

It doesn’t hurt to create a website for clients to learn even more about your services online either. Pro tip: invest in digital marketing for baby product companies!

Get Into the Baby Business Today

Looking to get into the baby business?

If so, then you’ve come to the right place. For those of you who are still feeling clueless, planning out a baby business isn’t as hard as you think. In fact, all that you have to do is fundraise enough capital to get started.

The rest is simple: purchase or lease a storefront. Next, focus on fulfilling inventory orders and hiring staff members. After that, acquiring accounting devices and obtaining display racks should be stress-free.

Now that you’ve made sure that your baby business is legitimate, follow local rules and regulations. Once you get the proper paperwork together, host a grand opening to attract new customers. Keep your prices low and you should be good to go!

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