| In order to
determine how much start up money you will need,
you must estimate the costs of your your
business for at least the first six months.
Every type of business is different, and has its
own specific cash requirements at different
stages of development, so there is no blanket
method for estimating your startup costs. Some
businesses can be started on a minimal budget,
while others may require substantial investment
in inventory or equipment or labor.
It is vitally important to know that you will
have enough money to start your business
venture.
To identify your startup
costs, you must determine all the expenses that
your business will incur during its initial
phase. Some of these expenses will be one-time
costs such as incorporation expenses or initial
training. Some will be ongoing, such as the cost
of advertising, equipment, personell, utilities,
inventory, insurance, office expenses,
telephone, etc.
While identifying these costs,
decide whether they are required or an option. A
realistic startup budget should only include
those items that are critical to start that
business. These critical expenses can then be
split into two separate categories: fixed and
variable. Fixed expenses include rent,
utilities, administrative costs, and insurance
costs. Variable expenses include inventory,
advertising, shipping and packaging costs,
expansion or new market costs, sales
commissions, and other costs associated with the
sale of a service or product.
The best way to calculate your
startup costs is to use a worksheet that lists
all the various categories of costs (both
one-time and ongoing) that you will need to
estimate prior to starting your business.
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