Financial Understanding

  • November 2, 2020

Most business owners know their product, service, or idea inside and out. However, not every business owner has a deep understanding of the total financial requirements of the business.

It is important to know what the costs will be utilized for getting the business off the ground as well as for general operating costs and commercialization costs. There are many things to consider, such as labor, overhead, materials costs, administrative costs, fringe benefits, and so much more.

Understanding these financial requirements is essential for several reasons. First, when asking for funding, you will know how much is necessary to complete the project in its entirety. The second important reason is that you will demonstrate to funders that you understand the cost of development and commercialization of a product. This will make your company much more appealing to both federal and private funders.

Developing Financial Understanding

But how do you know how much things will cost? One way to find out is through using estimates. We are fortunate to live in a time where any information we want is only a click away. By researching average costs for similar services, it is easy to get an idea of what you can expect to pay. Many services, such as administrative support and web services, are happy to provide a quote at your request. Another important thing to research is the average rate of pay for employees. By understanding what labor will cost, you can more accurately predict how much you will need to spend annually on help. Many business owners vastly underestimate the cost of hiring sufficient labor.

Demonstrating Financial Understanding

By creating a budget and sharing it with potential funders (both federal and private), you can prove to the people who may be interested in funding your business that you are financially savvy and understand the nuances of the financial aspects of running a business. Developing this knowledge will create confidence in investors and increase your chances of successful funding.


We work with high-growth startups and organizations that support the startup and innovation ecosystem. We build highly specific non-dilutive funding menus, provide proposal preparation services, and measure outcomes of funding through evaluation. Schedule a consult call with us HERE.

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