startup expenses – Bada Business

What is a Startup? How Do Investors Add Value To Startups? All You Need To Know

India is now becoming the world’s fastest growing startup ecosystem. In order to understand a startup ecosystem, one needs to know what a startup means! A startup is a young company that is usually founded by one or more entrepreneurs to develop a new and unique product. These entrepreneurs launch a service and bring it to market for people to use and benefit out of it. Startup, as the name suggests, begins with initial funding from the founders, their friends, families, relatives, among others.

Startups are becoming very popular in India. A start-up is basically a company or project begun by an entrepreneur to seek, develop, and validate a scalable business model. Startups face high uncertainty but some of them do go on to be successful and influential and become unicorns. The startup process can take a really long period of time and can go up to years to be successful. Hence, sustaining effort is required.

Over the long term, sustaining effort is especially challenging because of the high failure rates and uncertain outcomes. One needs to understand the basic concept that an entrepreneur is an individual while startup is an entrepreneurial team, and needs to work accordingly to achieve the desired goals.

How do Investors add value to Startups?

According to Startup India Portal, which is India’s largest online entrepreneurship, the investors, particularly venture capitalists (VCs) add value to startups in a number of ways. The Startup India Portal platform allows startups to network, access free tools & resources and participate in programs & challenges.

Stakeholder Management: Investors play a key role in building up the startup. They help by managing the company board and leadership to facilitate smooth operations of the newly started firm. In addition, their functional experience and domain knowledge of working and investing with startups imparts vision and direction to the company.
Raising Funds: Investors are best guides for the startup to raise subsequent rounds of funding on the basis of stage, maturity, sector focus etc. and aid in networking and connection for the founders to pitch their business to other investors.
Recruiting Right set of people: Sourcing high-quality and best-fit human capital is critical for startups, especially when it comes to recruiting senior executives to manage and drive business goals. The venture capitalists, with their extensive network can help bridge the talent gap by recruiting the right set of people at the right time.
Proper Marketing of the Product: VCs assist with marketing strategy for your product/service.
Merger and acquisition opportunities: The venture capitalists should be alert about the merger and acquisition opportunities in the local entrepreneurial ecosystem to enable greater value addition to the business through inorganic growth.
Organizational Restructuring: As a young startup matures into an full-fledged established company, the venture capitalists help with the right organizational structuring and introduce processes to increase capital efficiency, lower costs and scale efficiently.

In India, the Government, under the leadership of PM Narendra Modi, has started and promoted Startup India initiative to recognize and promote startups. This initiate is aimed to develop Indian economy and attract talented entrepreneurs.

9 Common Startup Expenses ’ The Checklist

Common Startup Expenses: The Must-Read Guide

You’re almost ready to start your new business venture. Congratulations!

You have thought of a great business idea that you know your customers are going to love.

But the path ahead of you won’t be easy. The key to a successful business is preparation.

Un-accounted or sudden Startup expenses are the most common reason why startups fail. Before you open the doors of your business, you’ll have bills to pay.

Understanding startup business expenses will help you launch and grow your business successfully.

Calculating startup expenses helps you:

Evaluate the break-even point of your business
Estimating revenue or profits
Securing loans
Attracting investments in your business
Save money

Startup expenses vary from business to business, but there are 9 common expenses that you should consider when preparing your startup.

1. Registration & licensing fees:

When you start your business, you will have to register your business as per the rules & regulations of the government.

Depending on your industry, you might have to incur expenses on additional licenses as well.

2. Rent:

You might not have to worry about the rent, if:

You’re starting out as an individual, or
You plan on letting your employees work from home

But, if you need an office space or space for a shop, it’s going to cost you.

Rent is one of the key factors in the success of a business, as:

It’s one of the main operating costs in a business
It’s a fixed cost

3. Utilities:

In addition to the fixed cost of the rent, you’ll be responsible for paying additional expenses of your office space like: Electricity bill, Water bill, Gas, Internet & phone bills.

4. Employee Salaries:

You need to pay your employees, even at the initial days of your business when you’re not bringing in much revenue.

Employee salaries will probably be one of your most costly startup expenses for years to come.

Payroll includes:

Wages of your employees
Additional benefits: bonuses, commission, overtime pay.

5. Office furniture, equipment’s & supplies:

Office and supplies add up fast.

Even if you’re working from home, you might need desks, chairs, computers, phones, filing cabinets, printers, ink, pens, and papers.
If you’re operating in a traditional 9-5 office environment, you might need a microwave, water cooler, etc. apart from the desks, chairs, computers, and phones.

6. Inventory:

If you’re in retail, wholesale, manufacturing or distribution, you will have to maintain inventory to sell.

Knowing exact inventory requirement is tricky:

Excess inventory: carries a risk of spoilage or damage and keeps your capital blocked
Less inventory: carries a risk of losing customers

Hence, you should calculate your minimum inventory requirement by analysing the trends of your industry.

7. Marketing:

Marketing and promoting a new startup is almost a non-stop task.

Marketing material might include Banners, Business cards, Brochures

Digital marketing increasingly forms the basis of many startup’s efforts to attract and retain customers.

Also, it’s almost unheard of a business today that doesn’t have its website; so whether you design your own website or pay an agency to design one for you, you’ll need to factor in the time and money to develop an online presence.

8.Technology:

In addition, there is a growing list of other technology expenses you should be aware of when preparing your startup:

Software licenses
IT support
Data storage
Email accounts
Payment gateways
Any third-party integrations or services

9. Taxes:

While planning your budget, you’ll have to assign a specific amount or a percentage of your budget to allocate towards taxes.

The amount you pay depends on your revenue, deductible expenses and your business entity.

You should work with a professional Chartered Accountant (CA) to manage your business taxes, which is money in and of itself in the list of your startup expenses.

Don’t forget to budget your expenses:

When calculating your business startup expenses, a good rule of thumb is to be able to cover at least 6 months’ worth of expenses up front.

When you’re getting ready to launch your new startup, it is very easy to get carried away thinking about the glamorous things, like the products that you’re going to make, or the innovative marketing campaigns that you’ll run.

However, unless you can make sure that your business is profitable, you won’t be able to keep the lights on for very long.

We know, planning and estimating your startup expenses is one of the most stressful parts of launching a new startup.

But being realistic about estimating your startup business expenses will go a long way towards getting your company up and running.