For crypto investors, any given day can feel like a roller coaster ride. The price of Bitcoin, for instance, regularly goes up or down by more than 5% in a day. In contrast, stock indices like the S&P 500 or Dow Jones Industrial Average rarely see swings that large.
During a bad turn for digital assets, it’s natural to wonder what caused the price drop — and what you can learn from it. Of course, each day on the market may bring a different answer for why crypto is down (or up), but understanding the basic mechanics behind crypto’s volatility can help you make better decisions.
Here are some of the many possible reasons behind big drops in prices:
Low liquidity. If a cryptocurrency is trading at lower-than-usual volumes, weird things can happen, like a single large trade throwing off the market by swinging prices closer to the value of that transaction.
Speculative trading dries up. High-risk trading with hopes of quick returns can end badly when momentum wanes.
Loss of trust. Trust in a product is a price driver. If it evaporates, prices can, too. In addition, because crypto is a novel asset class based on relatively new technology, signs of trouble such as cyberattacks or product failures can adversely affect the overall market.
Whatever the reason behind the crypto price trends of a single day, it’s important to remember that volatility has been a defining part of crypto investing.
Even Bitcoin.org, the website started by Satoshi Nakamoto to help explain Bitcoin, doesn’t shy away from that fact when it states: “relatively small events, trades, or business activities can significantly affect the price.”
Making sense of the bigger picture
In addition to dropping a lot in one day, cryptocurrencies are vulnerable to macroeconomic factors that can push down values for weeks or months.
In November 2021, a price decline turned into a sustained nosedive that continued until midway through 2022, when prices stabilized far below their lofty former highs.
Crypto’s drop coincided with price declines in many asset classes, but the declines in crypto were far steeper. For example, the S&P 500 dropped around 25% but has clawed back about half of those losses. Meanwhile, Bitcoin is still worth less than half of what it was before Thanksgiving 2021.
When explaining crypto’s drop, sometimes called “crypto winter,” experts point to the same root cause: Investors were looking to offload risky assets of all types amid economic uncertainty.
Adam Grealish, director of investment solutions and GM of advisory at Altruist, a software platform for financial advisors, said the scale of these big declines in crypto prices undercuts “the story about it being digital gold and a place where folks are moving to protect wealth.”
“While there’s an interesting theoretical argument for it, empirically it trades much more like a risky, high-volatility asset,” Grealish said.
The macroeconomic environment in 2022 hasn’t been kind to risky assets.
Red-hot inflation has driven prices up. In response, the Federal Reserve raised rates, which lifted the interest charged for all types of loans. When money is more expensive, stocks and other assets can suffer. As a result, investors tend to flee riskier investments, including crypto.
While this is bad news for investors and customers alike, Greg King, founder and CEO of crypto investment firm Osprey Funds, says this is part of an evolutionary process that will improve the industry in the long run.
“Our view is that it’s a positive in cleaning out some of the dead wood there,” he says. “All of the companies that went under that were in the press were centralized operations with poor risk management.”
It’s impossible to know what course the crypto market could take from here.
If interest in cryptocurrency investing recovers to the levels seen in 2021, that could benefit people willing to weather the tough times. But don’t confuse a volatile asset for a basketball; only with the latter can you expect a bounce back because it fell. Volatility means that prices could still go in either direction.
Small Business Funding: Exploring Options and Strategies
Small businesses recognize the key role of funding in propelling their growth, as every dollar invested paves the way for opportunities and prosperity. That said, securing funding is often a critical step for small businesses to start, expand, or sustain their operations.
While funding options may vary depending on the business’s stage and needs, it’s essential for small business owners to explore the available options and develop effective funding strategies. Read on to explore various funding options and strategies that can help small businesses obtain the necessary capital for success.
1. Self-Funding and Bootstrapping
Self-funding, also known as bootstrapping, involves using personal savings or assets to finance your small business. This option allows you to retain full control over your business and avoid debt. However, it may limit the initial capital available and may require personal financial sacrifices to invest in your business’s growth.
2. Friends and Family
Seeking financial support from friends and family members is a common option for small business owners. It involves borrowing money or receiving investments from people you have personal relationships with. While this option may offer flexibility and lenient terms, it’s essential to approach such arrangements professionally and have clear agreements in place to avoid potential conflicts.
3. Small Business Loans
Small business loans are a traditional funding option offered by banks, credit unions, and other financial institutions. These loans provide capital with a defined repayment schedule and interest rate. Small business owners need to present a solid business plan, financial records, and collateral to qualify for a loan.
It’s crucial to carefully review terms and interest rates to ensure the loan is manageable for your business.
Crowdfunding platforms allow businesses to raise funds from a large number of individuals who contribute varying amounts. This option leverages the power of the crowd and can provide not only financial support but also help validate your business idea and build a community around your brand.
Effective crowdfunding campaigns require compelling pitches, engaging rewards, and strong marketing efforts to attract backers.
5. Grants and Government Programs
Various grants and government programs are available to support small businesses in specific industries or locations. These funding options often have specific eligibility criteria and application processes. Research local, regional, and national grant programs relevant to your business’s industry or specific needs.
Applying for grants may require significant effort, but it can provide non-repayable funds to support your business’s growth.
6. Angel Investors and Venture Capital
Angel investors and venture capital firms are sources of funding for small businesses with high growth potential. Angel investors are individuals who provide capital in exchange for equity or ownership in the company. Venture capital firms, on the other hand, invest larger amounts of capital in exchange for equity stakes.
These funding options often come with expertise and mentorship from experienced investors, but they also involve giving up partial ownership and decision-making control.
7. Business Incubators and Accelerators
Business incubators and accelerators are programs designed to support early-stage startups by providing funding, mentorship, and resources. These programs often require entrepreneurs to go through a competitive application process. In addition to financial support, incubators and accelerators offer guidance, networking opportunities, and access to a supportive community of fellow entrepreneurs.
8. Alternative Financing Options
In addition to traditional funding methods, small businesses can explore alternative financing options. These may include invoice financing, where you sell your outstanding invoices to a third party for immediate cash, or merchant cash advances, where you receive a lump sum in exchange for a portion of future sales.
While these options can provide quick access to capital, it’s important to carefully assess the terms and potential impact on your cash flow.
9. Business Credit Cards
Business credit cards can be a convenient and flexible funding option for small businesses. They allow you to access a revolving line of credit that you can use for various expenses.
It’s important to choose a credit card with favorable terms, such as low interest rates and rewards programs that align with your business needs. However, it’s crucial to use business credit cards responsibly and avoid accumulating excessive debt.
Exploring funding options and developing effective strategies is essential for small businesses to secure the necessary capital for success. Whether through self-funding, seeking support from friends and family, obtaining small business loans, utilizing crowdfunding, accessing grants and government programs, seeking angel investors or venture capital, participating in business incubators and accelerators, or exploring alternative financing options and business credit cards, small business owners have a range of options to consider.
You need to carefully evaluate each option, consider the associated terms and risks, and choose the funding approach that best supports your business’s growth and long-term financial stability.
Comparing Business Loans
Starting a business can be costly. Whether it is for a start-up business or a new and exciting idea in your business, a loan is an example of a funding option. The choice of funding can determine the structure of the business, and therefore, it is essential to make the right choice.
Why Use a Comparison Site?
There are different types of funding. Self-funding and investors are two types of funding, the last being loans. If a loan is the right choice, it is important to compare different options to find one that best fits your business.
You can compare loans on creddio.com with factors like interest rates and repayment options is the way to secure the most stable and suitable loan. Otherwise, you may end up with a loan that can be difficult to repay. The comparison site gathers all the necessary information such as fees, loan terms and even special features like whether or not the loan comes with a discount.
Eligibility for a Business Loan
If you are starting up a business, the bank may not be willing to finance your loan. As such, the eligibility for a loan often depends on the financial situation of your business. This can include your credit history and income. But certain requirements depend on who is providing the loan.
For example, the U.S. government requires a business to be registered, and that the business is located within the country. Generally, taking a loan out depends on the state of your finances. Therefore, it is a good idea to understand your business’s financial situation before applying for a loan.
Loan for Your Business
When considering a loan, one of the first things to discover is what you need the funding for. Is it to start up a business? Is it to hire more people? Or do you need more capital for a big project? The amount of money you can secure in a loan will depend on your loan proposal.
When applying for a loan, you need to state things like personal finances and how long the business has been running. After that, the financial institution will get in contact, and you will be able to see their loan offer.
Types of Loans
When loaning money for a business, there are two types of loans: Secured and unsecured business loans. A secured loan is a loan where you as the borrower give an asset to secure the loan. This can be anything from your car to your home. The lender then has a claim over the asset, the personal possession, until the loan is repaid.
An unsecured business loan does not require an asset and includes loans like quick loans, personal loans and credit cards. However, the interest rates are also higher with unsecured loans.
Regardless of which type of loan you plan on receiving, it is paramount that you research all your options and have a good understanding of your business’s financial situation before applying for funding.
How much does it cost to start a business in 2023
Starting a business in 2023 needn’t be overwhelming. I get it, there’s a lot to think about and as a new entrepreneur, there’s one thing on your mind: money. Can you afford it, will the business sustain you, how will you juggle your side hustle alongside your life commitments – maybe even another full-time job – exactly how much does it cost to start a business in 2023?
No doubt, there’s a lot to think about, but the more you think the more reasons you’ll find not to follow your dreams and that’s the last thing I want for you.
So, instead of overthinking, read through this comprehensive guide including a breakdown of startup costs and tips to manage costs at every step.
Fixed costs to start a business in 2023
The fixed costs of your startup will depend on the type of business. As a freelancer you can start up a business for $0, assuming you already own a PC and have access to Wi-Fi.
Businesses that need more involvement from operations, products or digital assets like websites may need to spend more.
The cost of your business will be unique, but you can use the guides below to determine how much it costs to start your dream business in 2023.
Domain, website or online store
The majority of startups need a website either to trade and receive enquiries online or for a presence in Google search and Google maps for local search.
That said, if you’re starting a service-based business you may be able to drum up business without a website by using social media platforms like LinkedIn. This is what I did for two years, keeping my start-up cost at $0.
To save the cost of a website, ecommerce stores can create shops on Etsy and pay minimal fees to upload products. Then, it’s just a commission on sales. Alternatively, you can start affiliate marketing on TikTok which costs nothing to set up.
While free alternatives are great, at some point your business will likely grow to a point where you want a more robust online presence. And ecommerce merchants should be prepared to source a point-of-sale (POS) system or technology allowing them to accept online payments.
For entrepreneurs who need a website, start by sourcing your domain and hosting.
In general, non-premium domains cost between $1 to $20, depending on the deal you are getting and the number of years you decide to register the domain for. To explore prices buy a domain and search for your desired website URL.
Tips for managing the cost of domains: you can cut costs by exploring cheaper domain suffixes. Generally, but not always, .com or .co.uk will be more expensive than .co, .io, .site, .shop. There are a lot of domain options so spend some time exploring suffixes and pricing.
Your website host is required to get your site on the internet and in front of customers. You’ll need to web hosting.
Tips for managing the cost of hosting: pay annually or for many years in advance to save money.
Website design and development
For those who need to create a website you can use drag-and-drop editors. This is perfect if you really want to cut costs. You can build brochure websites or use the online store builder if you’re starting with ecommerce.
If you’re not willing to create the website yourself, then don’t fret because there are affordable website design services to guarantee a website you (and your customers) will love. I’ve known entrepreneurs who started with websites that are quite affordable.
Tips for managing the cost of website design and build: if the thought of designing and developing a website is overwhelming, but you want to save costs, commit a couple of hours to creating a website with GoDaddy. I promise it’s easy and you might surprise yourself.
While you’re creating a website, consider creating a logo to display on your web pages and other brand collateral. Services like GoDaddy Logo Maker are free and let you quickly snag this key piece of branding.
Legal costs to register a business
Legal costs vary hugely between types of business and the required legal cover. If you’ve figured out how to create an LLC and you’re ready for the costs associated you can expect to pay anything from $485 to more than $1,000. Of course, this depends on what you can do yourself. More savvy start-ups may be able to tackle some of the legal requirements, thus saving money.
Tips for managing legal costs: consider the essentials. As a new business owner, it can be tempting to cover your business from every angle, but this may not be required at the very beginning. Consider what’s a must-have to start up, then take note of what you can purchase later and when it’s needed.
Marketing is one of the most flexible costs when starting a business. The options are endless.
At the cheapest, GoDaddy can support your business from $85/month, but a more multi-channelled approach will cost $500/month*.
The good thing about marketing is that you can do a lot alone. If you’re happy to manage social media platforms to drum up business, you can do well without spending a penny. It is time-consuming so that time investment must be considered.
If you’re thinking about marketing your business with ads then you need to consider the cost of ads versus the benefit. Generally, it’s not useful to start with a budget that’s too small simply because you won’t get the data you need to decipher a good ads campaign from a bad one. Don’t start an ads campaign until you’re ready to commit.
Tips for managing marketing costs: choose your marketing channels carefully, and do your research to find out which one is likely to have the biggest impact. It’s better to cover fewer channels well than many channels poorly. After all, you can always scale once you’ve nailed one platform.
Variable costs to start a business in 2023
Some prices are incredibly variable depending on location and the needs of the business. These items are listed below.
The beauty of starting a business in 2023 is that many businesses won’t need a physical location, but if you’re opening a brick-and-mortar store or plan to work in an office you’ll need to think about rent or mortgages.
Products or inventory
If you need to buy and hold stock you’ll need to outlay an initial investment upfront. The cost will vary on the units required. You can manage these costs by thinking carefully about what you’re likely to sell. Another consideration is what you can sell if you buy stock in bulk.
Tips for managing product and inventory costs: ask suppliers about their minimum order quantity (MOQ) and how costs vary on quantity. Also, consider drop shipping so you don’t have to outlay any costs at all.
Staff costs depend on seniority and location. You’ll need to consider the minimum wage of your state, but the federal minimum wage is $7.25.
Tips for managing staffing costs: businesses trading online can outsource work to talented new freelancers or over-pay freelancers in different parts of the world. You can also take on more work yourself or turn to software and AI to support your business.
Beyond the initial registration, startups need to consider tax. The rules surrounding tax vary so you must check the rules within the country in which your business is registered.
Paying your taxes usually means putting a percentage of your income aside to cover the costs, monitoring and recording your expenses to account correctly for tax write-offs or hiring an accountant to manage taxes for you.
Tips for managing tax costs: the more self-efficient you are, the less you need to pay an accountant. Many small businesses can manage the early tax returns alone, but a growing business will likely need an accountant eventually. Manage the costs by putting money aside regularly.
As a small business you’re likely to have ongoing expenses. You may not start with them but over time you’ll likely invest in subscriptions or software. Or, you might have shipping to consider for e-commerce. Costs will vary based on your requirements.
Tips for managing ongoing expenses: on-going expenses can creep up on business owners so be mindful of monthly subscriptions and the well-intentioned software you purchased. If you’re not using it, you’re throwing away money.
No matter what, any business is likely to be hit with an unexpected cost, eventually. Prepare for the unexpected by holding a budget to get you out of an emergency situation. Unexpected costs could include your sickness, the need to hire a consultant to solve a problem fast or if you’re in a brick-and-mortar store something could go wrong within the building.
How to fund your startup or small business
Getting funding for your new business is likely on your mind. Here are some common ways to earn funding for your start up.
Funding your business on your own can be a safe option. It removes the stress of meeting investor expectations and it can feel really good to know you build your new business with your own means.
Personal investment may require you to save for a few years before you get started, but freedom from other stakeholders can be highly desirable in the early stages.
Borrowing money through contacts
You can opt to borrow money from your personal contacts, friends and family, for example. If you choose to go down this route it’s really important to treat it as you would as a formal investment: draw up contracts, separate personal and businesses conversations. Be very clear on what the contract is.
Securing loans from banks is an option for funding. Generally, banks provide calculators on their websites so you can gage what you might be able to borrow. Be aware that it isn’t easy to get accepted for a bank loan, 80 – 90% of startups fail so banks are naturally careful who they lend money to.
Create a budget for your first year
Let’s take a look at various cost summaries for businesses with varying needs.
Your freelance service-based business cost summary is one of the cheapest businesses to start, it might look a bit like this:
|Laptop||$0||freelancers can start with any laptop that they have access to.|
|Internet||$0||work from home and freelancers don’t need to worry about additional costs for wi-fi.|
|Social media||$0||Organic posts don’t cost anything and can generate leads and clients.|
For those starting a service-based business and desire a more professional appeal can kick off a new business venture with a functioning site.
Here’s what the cost summary can look like:
|Domain||$1.67*||Use suffixes like .site to reach that $1.67 cost|
|Create a website||$0||Get creative and build your own site with GoDaddy.|
|Website design services||$350 and up||Optionally: chose website design services.|
|Web hosting||From $215.64/3 years*||Host your website for 3 years to pay less per annum.|
Marketing costs for the first year
If you choose to work with a service provider like GoDaddy your digital marketing services can be covered for as low as $85.00/month.
|SEO and website updates||From $85.00/month|
|SEO, website updates and social media||From $185.00/month (+$50 ad spend)|
|SEO, website updates and social media, content, emails reputation management, brand guides and a professional photo shoot||From $500.00/month (+$50 ad spend)|
Businesses you can start with a small budget
The digital world has opened a world of opportunity when it comes to starting a business for free or with a small budget.
Assuming you’ve got a PC, wi-fi and a desire to work or use social media to generate leads, you can start any of the following small business ideas, for free:
- Freelancing in digital services like writing, SEO, PPC, social media management or email marketing.
- Freelancing on platforms like Upwork or Fiverr.
- Affiliate marketing through social media platforms like TikTok. You will need to gain 1,000 followers before you can start this one.
- Consulting in a skill you already have (or can learn for free online).
Local services you can start with little to no start-up costs:
- Dog walking
Some businesses require a small budget to start, for example:
- Selling digital downloads on Etsy. You’ll pay a small fee to upload products, but then nothing until you make your first sale where you pay a percentage to Etsy.
- Selling on eBay.
- Print (assuming you’re doing the printing)
Closing thoughts on starting a business in 2023
Today, there is a lot of technology out there that can boost the success of your business. While there might be expenses associated with it, don’t forget the financial rewards that come with a successful venture. Keep that momentum going and make 2023 the year you founded a business to be proud of.
*Pricing data valid on March 2023. All prices listed are subject to change.
Kim Magdalein w/Magdalein Financial, Interviewed on the Influential Entrepreneurs Podcast: How Social Security Planners of America Helps Advisors Reimagine SS for Clients
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Kim Magdalein w/Magdalein Financial, Interviewed on the Influential Entrepreneurs Podcast: How Social Security Planners of America Helps Advisors Get Clients w/ Seminars
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