How to Figure Business Start-Up Costs

Start up costs are not easy to figure.

So, you're dreaming up the perfect business opportunity, and you think you've got all your bases covered. Think again. There is always one more thing to buy and one more cost that needs to be added in. It is best to be safer than paying over your head, so be as detailed and prepared as possible. Detailing every expense that you will encounter will never be an achievable feat, however, you can be prepared with more than enough of what you think you will need.

Instructions

1. Create a column for one-time costs and one for recurring costs. Things such as rent will occur over and over, while things like purchasing your signage will only happen once.

2. Write down all the inventory, fixtures and equipment you will need. Write down all the services you will need, including marketing materials, legal work and remodeling. Write down all your recurring expenses, including insurance and maintenance.

3. Get estimates for each item on your list. If you are unable to get an estimate, use your best judgment to come up with a figure.

4. Add up all expenses from each column. Add your two columns together. This number will be for your start-up cost all together. Multiply this number by two, and then two again. This is a safe estimate, as money never stretches as far as you think it might.

5. Multiply your recurring costs by 12 to figure your yearly expenses. This will give you an idea of how much you will want to have set aside to keep your business afloat in the toughest year.

References

• Online WSJ: How to Calculate Start-Up Costs