You heard the stories, you should believe it, that you can start your new eBay business with zero dollars in your pocket.
Fact is, that you’ll have some start-up costs to purchase inventory, if nothing else. How much money you need depends on what you’re selling and how you plan to handle your daily operations. And if you need more up-front money than you currently have in your pocket, you’re going to have to find a source to get it.
Before you try to pitch someone for a money, you have to count every dime to determine how much money you need. It will take certain amount of time to put together all numbers.
Let’s say that you’re starting your business from scratch, you’ll need enough money in the bank to pay for all your operating expenses until the time when you start generating real profits.
I made a checklist that going to help on the way, how much money you’ll need to get business of the ground:
Determining Cash Flow
In a nutshell,
– Office furniture, digital cameras, scanners, personal computers, printers, and similar expensive pieces of equipment. -
Rent and utilities
- Only if you need to rent a storage bin or warehouse space, or plan to lease office space, then you should include those. -
- Track your eBay and PayPal fees. These are variable expenses, typically figured as a percent of your projected sales (10% of total revenue). -
-Packing supplies.- Boxes, labels, postal scale, sealing tape, and the like.-
-Office supplies.- Paper, pens, paper clips, printer toner or ink cartridges, staples, and so on.-
-Inventory. -If you have to purchase the items you intend to sell, you include those inventory costs.-
Follow these bullet points to plan out your costs in each category, for at least 18 months.
Now I’m going to talk about cash flow(not profit).
Beginning is hard because you still learning terms, most of people make mistake by putting together cash flow and profit
Make sure to divide these right on the beginning.
Starting with amount of cash you have now and adding sales for the month and then subtract cash expenses for month. Certain number that you’ve got is your cash for next month.
What if I get negative number at end of the month?
Important thing is don’t freak out, just go back double check your math. If is everything alright you need to come up with some money to fix it. In other hand if you get positive number you’re good, that means you made extra cash.
Here’s the thing with cash flow, It doesn’t matter how much cash you end up with at the end of the year if you don’t have the cash when you need it, you’re short. If you getting more negative than positive numbers is good to do math more often. Do spreadsheet every week, 4 weeks at the month. You will have more control and you’ll see what cause that.
To understand this you will need to read few times while you practicing.
To make you even easier I want to show you one of mine spreadsheets:
If you look to the end of the 18 month, you can see that I’ve been in a very good cash position. Look at mine very first month, you see end of that month in a negative cash position. It took me five months to dig myself out of the hole.
In my case, I had negative cash position four months. For those four months I had to find some extra source of money.
So how much extra cash do you need?
All you have to do is look at the biggest monthly loss.