How to Start a Money Transfer Business – Budget Tip! (How much money do you realistically need to get started in this business).
Hello. My name is Faisal Khan. I’m a banking and a payment consultant and continuing with the how to set up a money transfer business YouTube series, the second point that I want you to be aware of is the monetary requirement to set it up.
People will enter this business thinking they can, you know, they have $10,000, $20,000, $40,000 to $50,000, and that ought to be enough to start. The minimum recommendation that I give to my clients is a $125,000, and I also tell them be prepared to lose about half of it. That means if your business plan doesn’t work, if your revenue projection does not work, if you’re not able to amass those clients the way you had thought of, and most likely it will not work. Half of that money is gone. Half of that money will not come back because the client acquisition costs are very high. The set up costs are very high. The monthly costs are going to be extremely high. You have to pay salaries etc. A $125,000 is the absolute minimum. Assuming that you are outsourcing 90 percent of the work other than customer support and marketing, and those are the big expenditures marketing aspect, especially.
So, a $125,000 is the magic number that I tell people. If you don’t have a $125,000 to spare on Year 1, don’t do enter the business. Whatever you have left, let’s say you have $50,000 and you want to get into the business, you know what – you will end up losing it.
There are people out there who will tell you otherwise that, you know, no, no, no, you don’t need this thing, you don’t need that. But the fact of the matter, is it costs a lot of money to acquire clients and you don’t need 50 clients or 100 clients to break even, you need thousands. You need about 1000, 2000 clients doing transactions every month. If you have 2000 clients, doing a transaction every month, and they each transaction yields you $10, then you’re making what? $20,000? Right? But, how much is $20,000 going to pay for. You have to have, you probably have a staff, they take salaries. You probably have expenditures etc. But that’s a decent start. $20,000 is not bad per month, but to get there, you need 2000 clients.
It’s easier said than done. Some people say oh I have memberships, I live in a community, I’m gonna go out. I have seen too many people start a business and then throw in the towel because they didn’t have money. They didn’t have the required capital to succeed. And they always are under the false assumption that eventually they will find money. Why would someone else give you money when you can’t find money for yourself? It’s not that easy. $125,000 is the number, if you don’t have it, don’t go into it.
See you in the next video.