Like most businesses that start with limited funding and resources, you too might be either pitching to potential investors or wondering how what part of the startup you should forego for now.
It makes sense that a business in its infancy may not have a dedicated financial manager, but before you cut out important departments of your dream startup, check out these steps towards creating a workable budget.
Do not be intimidated by that sub header. You can download an automatic software for this or use Google spreadsheets. All you have to do is make a list of your monthly expenses and come at a total figure.
Things You Have Bought
As a startup you would have likely bought items that make it possible for you to operate your business. These could include things sush as computers, vehicles, office space, and furniture. These assets are also referred to as capital expenditures. Even if you put down a security deposit or buy a patent, it will be treated as your startup asset. It is basically everything that is a priority for you to get your startup off the ground and start selling units.
Your Variable Costs
Variable costs are all those things that you had a hard time coming to an exact figure for because they change according to your sales. As your startup begins to grow you must keep in mind that these costs will increase as well.
Some examples of your variable costs may include marketing expenditure, utility bills, shipping costs, taxes, travel expenses, etc.
What is Your Revenue Like
You have to create a monthly projection for what you earn. As an app startup you will not have a past pattern to take notes from. Therefore a smart way to go about making your revenue projections is to create two forecasts. One forecast will be if your startup does well, and the other in case you do not hit your desired target.
Your revenue will include sources such as your savings, your investment income, and the income from direct sales, to name a few.
As the final step you have to add each one of these items to your list. Now review each and every entry and compartmentalize them as either absolutely necessary or something your appstartup can still operate without. At the same time you must also decide which of the costs you can reduce, or can start with after a few months. Some of the ways you can do this is to find free software substitutes for paid subscriptions, and opting for a coworking space, or taking on some of the marketing tasks instead of hiring a full fledged agency.
A startup budget is the most valuable thing you can have, next to a strategic business plan for an app startup. Once you have launched this budget will give you a realistic view of how your resources are spending money and earning compared to how you have imagined in your budget plan.