How much money do you really need to start your micro business?

Starting from home and using bootstrapping techniques will save you money and help your small business to stay afloat. But you will need some money – the question is, how much capital will you really need.

To work this out you should do a cash-flow forecast, planning your income and expenditure for the next six to twelve month. Doing this on a per month basis is certainly a good start. Here are a few pointers to think about, when doing your cash-flow:

  • Don’t be too optimistic – make your plan as realistic as you can;
  • Turnover or Income – what happens if you turnover is less than expected;
  • Payment Terms – what if your customers pay later than expected;
  • Business Interruption – what if you are ill, or your co-workers are ill;
  • Holidays – the costs in your business keep on running.

You need to remember that cash-flow forecasting is not a exact science, it is a planning tool. There will always be a certain degree of error in your plan, and that is the interesting part. Now you can learn what went wrong and understand your business better, it will force you to rethink and face facts. Running a business is not gambling, it is taking manageable risks, and the aim has to be to minimise the risks to your home business as much as possible – cash-flow forecasting does exactly that.

You will be amazed what you can learn about the financial dynamic in your small business within one hour, that is often all it takes to get started. Once you know where your money is going and what benefit you derive from this expenditure, you can start thinking about different – more cost effective – ways to achieve the same result, and have a healthier small business in the process.

If you need help to start your cash-flow forecasting, use the WinWeb free cash-flow forecasting tool and ask our 24/7 support staff for help.

So, how much money do you really need? ST.

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