New businesses are a volatile and experimental pursuit in testing out a new idea in the free market. In order to truly survive and thrive as a new business, a series of sound financial and leadership decision must be made to capitalize on the idea which has had such confidence put behind that it now exists as its own enterprise.
Let’s assume as a budding new business leader you have achieved the cash injection you so sorely need, be that from a wealthy investor, a crowdfunding campaign or a competitive loan from smallbusinessloans.co. Because getting the money can be such a difficult thing to achieve in the first place, figuring out what to do with it might not have been a consideration that you have really put much thought into. You need to be careful here. Without a sound financial plan, you will make costly errors in keeping your enterprise profitable, and setup without much initial difficulty.
Fortunately, there are some tried and tested places where you should invest your newly found capital. We’d argue it is best suited for the following places, and in the correct proportions, it should serve you well. Note that 20% of your budget should always go towards the continual surviving and daily operation of your firm.
Product Development – 30%
Around 30% of your budget should go towards making sure your first product is correctly built, safely assembled and that it passes the test of all the major authority catchments regarding the industry you are working within. Your product development simply cannot afford to be shoddy, so if you need to dip into more funds for an extended structuring cycle, adjusting the budget to be greater here is preferable than having to recall items or having a bad reputation built for your firm from day one. A solid, reliable and high-quality product will allow those who purchase it to feel like you have provided value for money, and that automatically assure that they will at least look at the next product you offer in your business life cycle.
Marketing – 35%
Your marketing budget should be the most sizeable of all of your budgeting proportions, as if your product is not marketing well and thrust before the eyes of budding consumers, you will struggle with sales no matter how solid your initial launch offering is. As a new firm, this is even more important than you realize. You are not selling your product in this instance; you are selling every single reason as to why a firm like yours currently exists in the first place. Make sure your marketing campaign if vast, multi layered and helps sell your business as one to watch in the industry you are targeting.
Staff & Support – 15%
Expanding your business is important, and making sure you are staffed with great people is part of this. Make sure that you have at least one person in each department, to save you from having to multi-role. If needs be, outsourcing your support call center can be just as useful or investing in online methods which allow your consumers to contact you can be of massive help to seeming responsive to your customer base.
These tips will help you proportion your budget well, to the point where you will make the most of and respect the cash injection you have received.