Are You Spending Too Much Money With Your Startup?
There’s been a lot of debate recently about how much money is too much to burn when you’re in the startup phase. There’s not really an easy answer to this – it depends entirely on the kinds of funds you have available to you and what your goals are in the early phases of your company. However, there are some guidelines or tips that could give you a bit of a better idea as to what is an appropriate spending level for your new business.
First, consider what the normal burn rate is for a new startup. Some business experts say that a general rule of thumb is to multiply the number of people you have on your 
team by $10,000 to determine the full monthly cost of operating your business in the startup phase. This is not the amount you pay employees – it takes into account the full cost of having a person on your team, including what you’re paying for rent at your location. If you run a fully virtual business, you obviously have fewer expenses to worry about.
Keep in mind that this rule of thumb is only a general guideline. You need to be able to determine for yourself what your financial needs are in the early going. What’s great for one business might be absurdly high for another.
There are other questions you can ask yourself that can help you to figure out an appropriate spending rate for your startup, especially when looking to scale up your operations. These include:
- Have we found our niche within the market that we’re attempting to penetrate?
- Am I looking to scale up operations because we have a need, or because I’m pushing too hard?
- Is more than five percent of my total budget being allocated to items outside of payroll, payroll tax, rent and benefits?
- Will I see sustainable growth beyond the first six months of scaling up?
- Am I willing/can I do everything required to be able to break even?
Finding the right answers to these questions could be harder than you think. But we at Viral Solutions are here to help you solve these types of issues so you can focus on the more enjoyable aspects of running your business. Contact us today for more information about how we can help your company.
Copyright 2014 Viral Solutions LLC
Watch out elephants! This slayer of business challenges comes with 30 years of record breaking sales, marketing, operations, training and leadership experience . He has worked face-to-face with 100’s of small business owners as well as large firms. His love of creating, communicating, developing and executing results for clients shines with each project, publication and training event. His entrepreneurial spirit, passion, industry experience, education, problem-solving prowess, charismatic personality and been-there-done that attitude leads his client focused approach.
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