Start-Up Costs
Every business is unique, and each has its own specific cash needs at different stages of development. Therefore, there is no universal method for estimating your start-up costs. Some businesses can be started on a shoestring budget, while others may require considerable investment in inventory or equipment. It is vital to know whether you will have enough money to launch your business venture.
To determine your start-up costs, you must identify all the expenses your business will incur during its start-up phase. Some of these expenses will be one-time costs, such as the fee for incorporating your business and the price of a sign for your building. Some expenses will be ongoing, such as the cost of utilities, inventory, insurance, and so on.
While identifying these costs, decide whether they are essential or optional. A realistic start-up budget should include only those elements necessary to starting the business. These essential expenses can then be divided into two separate categories: fixed (overhead) expenses and variable (related to business sales) expenses. Fixed expenses will include monthly rent, utilities, and administrative and insurance costs. Variable expenses will include inventory, shipping and packaging costs, sales commissions, and other costs associated with the direct sale of a product or service.
The most effective way to calculate your start-up costs is to use a worksheet that lists the various categories of costs (both one-time and ongoing) that you will need to estimate prior to starting your business.
References:
• Small Business Administration
Related Articles
| Personal vs Business Financing Starting up a business can be a tremendous strain on your personal finances. It can take six months or more before your new venture is profitable and can provide financial support for you and your family. Before going into business it is always wise to get your personal finances in order.
|
| |
| Types of Financing Thanks to the enormous growth in personal wealth over the past two decades, there are now more funding opportunities than ever for entrepreneurs |
| |
| Debt Financing It is often said that small businesses face difficulty borrowing money, but this is not necessarily true. Banks make money by lending money. However, the inexperience of many small business owners in financial |
| |
| Equity Financing Equity capital or financing is money raised by a business in exchange for a share of ownership in the company. Ownership is represented by owning shares of stock outright or having the right to convert other financial instruments into stock of that private company. Two key sources of equity capital for new and emerging businesses are angel investors and venture capital firms.
|
| |
|
Featured Benefit
Financing
Get SBA loans ranging from $25,000 to $2,000,000 today!
> Learn More
|
|
Recommended Books
|