Figuring out how much you need to successfully start your business may not be such an easy task. But you need to start somewhere.
And the best place to start is by creating a simple list. Keep it on hand for a few days after you create it, because more issues will start to come to you.
Here's a sample list that may help you get started. They may not all apply to your business, and other issues that do apply to your business may not be on this list. Each business is different, but this list is a good place to start.
The list is divided into two parts: business startup costs and ongoing business operating costs.
If you really want to make use of this list, print this or create your own list and write down a figure next to each item you need. Then add up the list, and you may have a good idea of what you need.
Business Startup Costs
$_______ Registration fees - business name, legal fees, lease agreements, trademarks, domain name, etc.
$_______ Special equipment
$_______ Merchandise
$_______ Computer
$_______ Fax
$_______ Phone
$_______ Photocopier
$_______ Office supplies
$_______ Desk
$_______ Furniture
$_______ Decor
$_______ Stationery
$_______ Advertisements - flyers, ads, announcements
$_______ Grand opening costs - party, ads, giveaways, invitations, etc.
$_______ Licenses - you may need a license for your business
$_______ Other
Ongoing Business Operating Costs
$_______ Merchant account fees
$_______ Bank fees
$_______ Rent or mortgage
$_______ Utilities - electricity, heat, water, phone, Internet
$_______ Loan repayment and interest
$_______ Wages
$_______ Marketing
$_______ Your income/salary
$_______ Bookkeeping
$_______ Special license fees
$_______ Other
$_______ Total
Personally, I like maintaining an emergency fund. This is like a 'rainy day' account where you can put some money away (say a small percentage every day, week or month) depending on how your business goes. The amount will help you when times are slow so you can concentrate on the business and not on how you are going to make any payments you have coming up.
Now that you have listed your business start up costs and monthly operating expenses, you have a better idea of what you need to stay in business.
Good money management is essential to a successful business and it's absolutely critical that money is managed well, especially during the early stages.
That's the way I see it.
Acey Gaspard
A Touch of Business.com
Action Steps to Calculating your Startup Costs
- Accomplish the list above. After you get the total cost, evaluate if you have the money for it or you need to raise funds.
- If you need to raise funds, determine the best option available to you (i.e., get a loan, sell a car? etc.)
Important Points to Calculating your Startup Costs
- A lot of businesses fail before they reach their full potential because business owners were not fully aware of how much money they needed to start and run the business.
- Determining your operating costs is important. If you don't know how much you need to run your business, then how do you know how much you need to earn to turn a decent profit?
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[ See Also : Our Business Guide on How To Start A Business - Everything You Ever Wanted To Know About Starting a Business But Were Afraid To Ask ]
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