Questions are often given to people who have opened a business: “How much capital you need when starting a business?” The answer often is: “… several million dollars or a few dozen million ….” Principally, there are a number spoken. Because generally when we want to run a business, many of us who do not know how to calculate it.
In principle, of doing business, there are only 3 types of capital that you would exclude:
1. INITIAL CAPITAL INVESTMENT
What is the initial investment capital? This is the kind of capital should you spend at the beginning, and is usually used for the long term. Examples of this capital is the building, equipment such as computers, vehicles, office furniture and other goods used for the long term.
If your business bike shop business, then your initial investment capital is the building, workshop tools, and other furniture in the workshop is required. If your business stores, then your initial investment capital are a shelf, table, perhaps even register.
Usually, this capital value is large because enough for long-term use. But the value of this early investment capital will shrink from year to year even from month to month.
2. WORKING CAPITAL
This is capital that should you spend to buy or make your merchandise. This working capital can be issued every month, or every order comes. For example, if your business is the business place to eat, then the working capital you need is capital to buy groceries. If your business development efforts made crafts, then your working capital is the money you spend to buy raw materials. If your business is a photocopy services, your working capital so that you spend money to buy paper, ink, and so forth.
Principle, no working capital, you will not be able to complete your order or do not have the merchandise. Later, you might not even be able buyer because the goods just are not there. That is the importance of working capital.
3. CAPITAL OPERATING
The last capital is operational capital. Operational capital is capital that you need to spend to pay the monthly operating costs of your business. For example the payment of employees salaries, cost of phone bills, electricity bill, water bill, even the cost of retribution.
In general, the posts contained in this capital of nearly the same in every company. This is because, in principle, the meaning of operational capital is money that should you spending to pay the cost outposts outside of your business directly. So, Capital Operations are usually paid on a monthly basis.
Now you can calculate your own capital to start a business.
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