Financing Basics | Estimating
Costs | Finding Capital | Personal
vs. Business| Applying for Small Business Loan
| Small Business Lenders |
Cash Management | Startup Costs |
Breakeven Analysis | Financial Statements
Every business is different, and has its own specific cash needs at different stages
of development, so there is no generic method for estimating your startup costs.
Some businesses can be started on a shoestring budget, while others may require
considerable investment in inventory or equipment. It is vitally important to know
that you will have enough money to launch your business venture.
To determine your startup costs, you must identify all the expenses that your business
will incur during its startup phase. Some of these expenses will be one-time costs
such as the fee for incorporating your business or price of a sign for your building.
Some will be ongoing, such as the cost of utilities, inventory, insurance, etc.
While identifying these costs, decide whether they are essential or optional. A
realistic startup budget should only include those things that are necessary to
start that business. These essential expenses can then be divided into two separate
categories: fixed expenses (or overhead) and variable expenses (those related to
producing sales for the business). Fixed expenses will include things like the monthly
rent, utilities, administrative costs, and insurance costs. Variable expenses 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 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. The following tools will assist
you in performing that task:
Starting Costs Calculator