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Starting a business requires you to take a number of steps and make some key decisions.
In addition, determining which financing options will meet your short-term needs and long-term goals is crucial. Within this section, we’ll provide information on these topics of copyright and trademark issues, and getting support from an outside expert.
Every business is different and has its own specific cash needs at different stages of development; therefore 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 vital to know whether you will have enough money to launch your business venture.
To determine your startup costs, you must identify all the expenses 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 and the price of a sign for your building. Some expenses 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 elements that are necessary to start 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 figures like the 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 startup costs is to use our start up cost worksheet that lists the various categories of costs (both one-time and ongoing) that you will need to estimate prior to starting your business.