Budget Basics: Costs To Consider When Launching An Online Business

Planning a budget for a company that doesn’t exist yet is always difficult. However, you need to understand all the costs involved ahead of time. Only then can you work out how much investment you’ll need to get the operation off the ground. Today, we’re going to focus on people who plan to launch an online business. We’ll do our best to leave no stone unturned and offer lots of advice. There are always techniques you can use to reduce your expenses. Even so, there are some you simply can’t avoid So, pay attention to the information on this page and ensure you adjust your budget accordingly.

photo: Informedmag

Payment processing fees

Firstly, there is no getting away from the fact that you will encounter payment processing fees. That is because you will have to use merchant services as part of your online store. The cost of a merchant service account can vary depending on the provider that you select. With that in mind, it makes sense to perform a lot of research to ensure you get the best deals. That said, some specialist comparison websites could make your life easier. Just ensure you find the lowest rates, and the fees shouldn’t affect your profits too much. In some instances, companies charge less than 1% per transaction. If you end up paying more than that, just adjust your prices.

 

photo: MedithIT

Website hosting and running costs

Hosting and other running costs shouldn’t break the bank. However, lots of business owners feel shocked when they’re slapped with an invoice from their web designers. For that reason, it’s vital that you discuss all the costs involved in advance. If you don’t do that, some web specialists will try to take advantage. We heard about one company that was charged $3,000 for hosting every twelve months. Their website was small, and they were obviously getting ripped off. Make sure that doesn’t happen to you by asking for everything in black and white. Always sign contracts so the other party can’t add extra fees.

photo: TopRank Marketing

Online marketing to drive traffic

You will have to invest a lot of cash in online marketing if you want your new business to succeed. You could have the best products in the world, but you’ll never make a dime if people don’t know you exist. With that in mind, you should begin with social media and then branch out. Banner advertising tools like Google Adwords could help you to drive a lot of traffic. So, make sure you learn how to use them as soon as possible. Of course, you could pay professional marketers to manage your campaigns. However, they are going to charge a premium, and that means you spend even more.

Now you know some of the budget basics for starting an online company, we hope you get things right. If you understand how much it’s going to cost to get things off the ground, you’ll know the level of investment you need to seek. Don’t get us wrong; it’s much cheaper than launch a business in the real world. However, you still need to grasp all the costs if you want to succeed.

Here’s How You Can Track Expenses Effectively and Avoid Going Overdraft

If you are struggling with managing your finances so as to avoid getting into debt, you are not alone. Being in your bank account overdraft can be helpful when you really need the facility, especially for short-term borrowing or in cases of emergency as a last resort. However, you can run into problems when you start relying too much on it. Going over your limit does not simply mean you have to repay what you owe, it also means that there are extra charges that are incurred. Effectively tracking your expenses can help you keep your finances in check so that you do not go overdraft. Here’s how:

  • Keep Track of Your Spending

A sure way of effectively keeping track of your spending, is by itemizing your spending from time to time, and identifying areas where you can reduce expenses. If you find areas where you spent needlessly, like a gym membership you do not use, monthly subscription for magazines that you do not read and so on, it is advisable to cut them off.

Take a look at your card payments, withdrawals and so on. What was the money used for and where do the expenses leave your account balance? Understanding your overdraft is another way to keep track of your spending. You have to constantly know the state of your bank account so that you know when you are approaching your limit. Although you do not have much of a problem when you have access to authorized overdraft where there is an agreed borrowing limit, it is even worse if the overdraft is unauthorized, and no prior agreement has been made between you and your bank. Even so, it is always safer to manage your spending in such a way that you do not need this credit option in the first place.

  • Monitor Your Budget

It is easy to go over your carefully drawn out budget if you do not consciously monitor it. You need to be sure that you can afford the expenses you have listed.

When you spend within a budget, you are better able to reduce the possibility of spending without first thinking about it, so that you do not spend spontaneously. Although it takes a lot of discipline, consistency with monitoring your budget helps you save more, helps you know where your money is going and keeps you debt-free.

  • Make Use of Apps to Manage Your Money

There are a number of online tools and applications that can help you with getting your personal finance management right. A major challenge for many people with effectively tracking personal expenses is that they sometimes have to manage different bank accounts and pay different bills. Keeping up can be challenging. Thankfully, there are personal finance and management apps that help.

Selling your car? Here’s three reasons why leasing could be better for you financially

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If you’ve reached the end of your tether with your current car, and you feel it’s time to upgrade to a fresher model, you don’t have to save for months on end to reach that point – you could go out and get a new car right now. How? More and more people are reaping the rewards of leasing a new car. If this all sounds like news to you though, then read on for our top three reasons why it could save you money in the long term.

  1. Depreciation is reflected in the price

The biggest benefit to leasing over buying has to be the depreciation factor. Simply put, as soon as you buy a car, its value begins to drop. With some vehicles it’s more than others, but in a lot of cases, it makes far more financial sense to lease, because the monthly instalments you make decrease as a reflection of the drop in value. Were you to buy the car on finance though, the amount you pay would remain the same.

If you’ve found a car that you love, it’s well worth doing a check online for the depreciation of the vehicle first to see which option would be better for your wallet. For example, Which? recently conducted a study on several specific models, and found that, while a Volkswagon Scirocco was worth 63% of its original price after three years, a new Ford Mondeo was worth just 36%.

  1. How many miles do you drive?

If you’re looking to lease a car, it is also important to consider how much you drive. For example, if you’ve worked all of your life and commuted, but now you’ve reached retirement and are using the car for personal use only, then leasing is a fantastic option. You may not need a car all the time, so having the ability to lease one for a month or so when you travel to stay with friends or relatives can be hugely convenient.

Most lease agreements can also restrict the number of miles you do, in so much as they will charge you for any extra accrued. So, if you’re driving far less than you used to, leasing is a more financially stable option; you can negotiate the number of miles driven per month, meaning far less costly monthly instalments when compared to loan payments.

  1. It can be claimed as a tax deduction

There are even more benefits if you are an entrepreneur. As a business owner, it’s worth noting that lease instalments can be registered as a tax deduction. Plus, some people may be worried that they will be refused a lease due to a bad credit rating, given the financial checks involved. However, it’s actually easier to get a lease on a new car than it is to get one on finance, so again, it’s far more convenient.

Do you know any other reasons why leasing could help your finances?

How to get a business loan

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If you’ve got a small business or a start-up and you’re new to the world of business finance, it can be a little overwhelming. You need an injection of funds in order to grow your business, but where do you look for a loan? It can be very difficult for small businesses with no accounts and no track record to get an affordable loan, unless they know where to look and how to go about it.

Here are the basic steps you need to follow to find the right loan provider, apply and get your loan approved:

Step 1: Work out exactly what you want, and what you can afford to repay

Before you even attempt to shop around or apply for business loans, you need to crunch the numbers and perhaps sit down with a financial adviser to pin down exactly what you need. Consider all of your costs to see how much money you actually need for your plans, and then turn to terms. How much can you afford to pay back each month and how many years will you need in order to repay in full? Will you want the opportunity to repay early, and will you be happy with a fixed or a variable rate?

Step 2: Make sure your business plan is rock solid

The key to success in business loan applications is often the strength of the business plan. The lender will want to see a plan that is thorough, comprehensive and realistic, with plans for failure as well as success and plenty of facts to back up ideas and forecasts.

Step 3: Run a credit check

It is absolutely crucial to know your business credit rating before applying for a loan, as this is something lenders will definitely want to see. Many companies offer free checking services, and if you don’t yet have a business credit score then you should make sure your personal rating is as high as possible.

Step 4: Shop around

Armed with your exact requirements and all you need to apply, you can now start to scour the market for the best deals. You can find all the information you need quite quickly online, with comparison services being particularly helpful. Look for the cheapest rates, the terms that suit you and also consider your chances of being accepted.

Step 5: Prepare your application and practice your pitch

Whether you need to persuade the lender on paper or in person, it’s important to prepare your application carefully. Detail how every penny will be spent, make sure you have all the facts and figures at your disposal and crucially – always be on time if you have an appointment at the bank.

Step 6: Consider negotiating

If you’ve been offered a loan, congratulations. However, if the terms or the rate don’t quite suit you, don’t be afraid to ask the bank to consider a different offer. If you can provide a knowledgeable, fact-backed challenge, you never know – you may end up negotiating a better deal.

Interest rate fall softens the blow of rising prices

The cost of borrowing is important to us all. While the physical price of a big ticket item is important, it doesn’t reflect what many of us actually has to pay for it.

Take the cost of a car, for example. The average price paid for a motor in the UK is said to be £21,164. Not many of us has that sort of cash lying around – or indeed the money needed to buy a more modest model either.

Most of us would need to pop some numbers into a loan calculator and work out what that would end up costing by the time we’ve paid it back.

That’s why the interest rate is important. Data from the last few decades shows how much this has fallen. In 1975, the Bank of England base rate was 11.25%. By 1995 that had almost halved and by 2015 is had fallen to 0.5%. It now sits at just 0.25%.

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These numbers don’t reflect the cost we actually pay when borrowing, but they are closely linked to the offers we can get.

So, while the cost of everything might have gone up over the past 40 years – at least we don’t have to pay more for the privilege of loaning money from a bank. It might be a fairly small silver lining, but while the cost of a car is 11.5 times more than it was in 1975, houses 18 times more and even a pint of beer 20 times the price of ’75, it’s a much needed positive.

Experts also reckon the cost of borrowing should stay low for a while yet, with the Bank of England rate tipped to be below 0.5% until 2021.

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