Before setting up any business, one faces uncertainties on various issues. That uncertainty causes stress and ambiguity in all aspects and more so when estimating the possible start-up costs of a business. To calculate the start-up costs in a company, one has to identify the start-up expenses depending on the type of business (SBA, n.d.). The most common start-up expenses include working space, facilities, utilities, licenses, advertising, research costs, inventory, remunerations, transportation, insurance, and website development. The discipline of entrepreneurship has evolved over the years (Kuratko, 2019). Studying the fundamental theories can help new entrepreneurs understand the process and practice of running a business.
To start up a hair industry manufacturing wigs, one needs a start-up cost amounting to around $33,000. I calculated this figure by adding the monthly and one-time expenses. The expenses include but are not limited to equipment for manufacturing the wigs and packing them, office supplies, rent, legal costs, permit and licenses, website, utilities, employee wages, inventory, transport, training, and advertising costs. Some expenses like permits and licenses are published, but the rest are estimations from other similar vendors.
To start up a business selling facial products with a machine for facial recognition, one needs around $15,000. When starting such a business, the essential expenses are utility bills, machine costs, product development, and advertising and marketing costs. Other fees include software, office space, inventory, website, and legal expenses. Today’s most common social media marketing tools are blogs, Facebook, Instagram, Twitter, YouTube, and LinkedIn (Kuratko, 2019). Social media marketing is affordable since one only needs to create something that causes attention and encourages an active dialogue between the business and its customers.
Starting up a coffee industry would require a start-up capital of around $60,000. Start-up capital is the amount of the total costs associated with starting a business. It may include the equipment needed, legal fees, utility bills, inventory, advertisement and marketing, website, employee remunerations, and licenses costs. All those costs are an estimation from online sources and similar service providers. To get a complete financial picture of the start-up costs, one must calculate the one-time and monthly expenses for one year. However, the ideal period to estimate that cost would be five years (SBA, n.d.). One-time expenses can be permit and license fees and purchase of major equipment. Monthly expenses include rent, wages, advertising, marketing, and other utility bills.
There are several sources of funding for a start-up business. They play an essential role in boosting the new venture’s capital. Compared to well-established companies, a start-up business can be challenging to obtain finances. Potential investors have to investigate the quality of a start-up business before making any investment (Waleczek et al., 2018). Business financing comprises internal and external equity. Internal business funding sources are mainly personal savings, the most common sources for most start-up businesses. If one does not have enough funding, they look for additional capital through other techniques such as bootstrapping (Waleczek et al., 2018). Bootstrapping is easy, convenient, and has lower risks than external sources of funding. External sources of finance are bank loans, hire purchases, partnerships, trade credit, and stock, among others.
The ideal sources of financing for the hair industry and facial products businesses are external sources such as bank loans. The businesses require large purchases of equipment and product development. The coffee industry should use internal sources due to the lower costs and risks. With extensive online marketing, the hair and facial products business can quickly develop its brand and make profits to refund bank loans. On the other hand, the coffee industry may take time to grow. Also, the coffee industry has more monthly expenses, thus making internal sources the ideal way of financing it.
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