| The first time you go through the costs to | | | | significantly less in terms of fixtures and |
| start up your new business, you do not need | | | | equipment. Computers, fax machines, modems |
| to be particularly precise. You can just | | | | are some of the most important equipment that |
| "ball park" the amount to get a rough idea of | | | | you would need. In addition, you should |
| your expected start-up costs. As you refine | | | | provide some budget for the costs of |
| your business idea and shop around for the | | | | installing all the fixtures and equipment and |
| various items you need to make it happen, you | | | | making sure that these are ready for use. |
| will be continually narrowing down your | | | | |
| estimates, and eventually you'll arrive at | | | | Hiring employees. Allocate a few months' |
| the actual dollar figures. | | | | salary for the payroll of your new employees. |
| | | | While employee costs will not actually start |
| Here are the common kinds of startup expenses | | | | until you are open for business, some |
| that most small businesses face: Research and | | | | entrepreneurs hire a few employees even |
| development costs. Whether you hire a market | | | | before the business is launched to help in |
| research firm or do research by yourself, you | | | | the initial groundwork. |
| need to budget for costs involved in knowing | | | | |
| more about your market. Interviewing | | | | Insurance Costs. You will need liability and |
| potential customers or suppliers, checking | | | | property insurance to protect yourself and |
| the Yellow Pages, or photocopying trade | | | | any business assets. Some other businesses |
| publications and articles about your business | | | | also require workers' compensation, health, |
| all involve costs. | | | | life, fire, product liability and |
| | | | professional malpractice insurance. Check |
| Business Plan Preparation. If you are | | | | what you need for the kind of your business. |
| preparing your business plan yourself, the | | | | |
| only cost to you is your time. | | | | Lease Payments. These include amounts that |
| | | | must be paid for equipment and facility |
| However, there are entrepreneurs who need | | | | leases before opening. Expect to pay several |
| help in developing their business plans. | | | | months' worth of lease payments even before |
| | | | you open your doors for business. |
| If you are one of those business owners, you | | | | |
| need to input the costs of hiring consultants | | | | Licenses and Permits. This amount will |
| or business plan writers into your initial | | | | include all fees charged by the local, state |
| budget. | | | | and federal agencies. The more regulated your |
| | | | industry, the higher the fees and charges. |
| Product Development and Beginning Inventory. | | | | Various states also have a different |
| This will be your most significant start-up | | | | licensing requirements and fee structure. If |
| cost. To get a better estimate, you can ask | | | | your business is based in California, for |
| potential suppliers for required inventory | | | | example, expect to spend for putting a legal |
| levels for your type of business. Some | | | | announcement in the newspaper to announce |
| entrepreneurs, particularly those who create | | | | your new business. In Virginia, there are no |
| their own products, take years of product | | | | such requirements. |
| development before a prototype can be | | | | |
| launched. You need to factor in the length of | | | | Professional Fees. You will probably need the |
| time that will take you to develop your first | | | | assistance of a lawyer in drawing up the |
| products. | | | | proper documents and filing them with the |
| | | | state if you are forming a partnership, |
| Advertising and Marketing Promotion Expenses. | | | | Limited Liability Company or corporation. You |
| You can chose to have some 'buzz' for your | | | | can opt to incorporate your own business |
| business, even before you officially open. | | | | yourself, as long as you understand each form |
| Some entrepreneurs do a pre-launch campaign | | | | and requirements. Part of the professional |
| to generate interest for their products or | | | | fees you need to budget include the |
| services. You can also plan for a "grand | | | | accountant's fees, should you decide to |
| opening" promotion as well. The cost, of | | | | outsource your record keeping or accounting |
| course, will depend on how simple or | | | | tasks. |
| elaborate your pre-launch activities will be. | | | | |
| | | | Signage costs. The signs for your business |
| Cash. This refers to the amount of cash that | | | | establishment can leave a significant dent on |
| you need to run your cash register. | | | | your budget. Obtain bids from sign companies, |
| | | | depending on how elaborate you plan your |
| One thing that your business should never be | | | | signs to be. |
| caught without is cash. | | | | |
| | | | Supplies. This is the part of your budget for |
| Cost of Financing. You also need to allocate | | | | all the office, cleaning and employee |
| some funds to help you cover your cost of | | | | supplies that your business needs in its |
| financing, whether you got your funds from | | | | first few months. To help you save, try |
| the bank or from your credit card. Be | | | | buying wholesale if you can meet the minimum |
| prepared to pay the interests of your loans, | | | | order requirements. |
| particularly if you used your credit cards to | | | | |
| finance your business. | | | | Cost of Web Site creation. If you are |
| | | | planning to supplement your brick-and-mortar |
| Remodeling and Decorating. This will include | | | | business with online operations, you need to |
| physical and cosmetic improvements to the new | | | | budget for the costs of creating a web site. |
| business facility. Solicit bids from | | | | These include web-hosting fees, web designer, |
| contractors or interior designers, even if | | | | e-commerce components (shopping cart, |
| you decide to do everything later on, to give | | | | merchant account, etc). You also need to |
| you an idea of how much these jobs cost. | | | | allocate some amount to cover the marketing |
| | | | and promotion expenses of your online |
| Fixtures and Equipment. The fixtures and | | | | business. |
| equipment needed for your new business are | | | | |
| normally substantial, depending on your kind | | | | Unanticipated expenses. The rule of thumb is |
| of business. A restaurant business, for | | | | to allocate about 10 percent of your total |
| example, will need modern kitchen equipment, | | | | start-up budget for contingencies and other |
| chairs and tables, tableware and utensils. On | | | | unexpected expenses. |
| the other hand, a home business will require | | | | |