Tips to Calculating Business Capital

The decision to set up savings or insurance for the child often makes parents confused. Savings and insurance have different functions. Is that our savings account opened in the bank, but we can take at any time. While insurance is the coverage provided by insurance companies to us if we have a risk.

Often we ask a person who had opened a business: “How does the capital you need it when it first opened your business today?”. An answer that often arises is: “… many millions of rupiah, or a few dozen million rupiah ….” right? Principally, there are numbers that come out. However, if you are asked like that, you cannot be answered. Because usually when we want to run a business, many among us who do not know how to calculate it.

Well, this time I’ll share a secret with you about how to calculate the amount of capital you need when you want to start a business.

In principle, in running the business, there are only three types of capital that you would exclude:
1. Initial Investment Capital
2. Working Capital
3. Operating Capital
Let us discuss them one by one.

What is meant an initial investment capital? This is the kind of capital should you spend in 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 is operating the motor repair shop, then your initial investment capital is the building, workshop tools, and other furnishings that are needed in these workshops. If your business stores, then your initial investment capital are a shelf, table, perhaps even register.

Usually, this capital value is large enough for use in the long term. However, the value of the Initial Investment Capital will shrink from year to year even from month to month.

2. Working Capital
This is capital that you need to spend to buy or make your merchandise. This working capital can be issued every month, or every comes order.

For example, if your business is eating place of business, then the working capital you need is capital to buy groceries. If your business development efforts made craft goods, then your working capital is the money you spend to buy raw materials. If your business is photocopying services, working capital yes you the money you spend to buy paper, ink, and others.

Principle, without working capital, you will not be able to complete your order or do not have merchandise. Later, you might not even go to be a buyer because the goods are just not there. That is the importance of working capital.

3. Operating Capital
The last capital is operating capital. Operational capital is capital that you need to spend to pay the monthly operating costs of your business. For example payment of salaries, monthly telephone costs, electricity, water, and even retribution.

Outposts in the capital was in all business operations are generally quite similar. This is because, in principle, the meaning of operational capital is money should you spending to pay for items outside of your business expenses directly. So, these are usually Operating Capital payable monthly.

Therefore, it is easy, right? Now, you can calculate your own, and spend the capital to start a business. I hope that useful.