How to estimate startup costs for your business

Determining a starting point for your business can sometimes be the hardest part about getting your project underway.

With so much to organise and plan out, it's easy for potential SME owners to get lost in their own ideas. However, there's no point planning for your future if you can't afford to maintain your business. In order to put your business in the best position from the moment it startsup, it's important you try to determine the startup costs necessary to give your business a chance of succeeding.

Determine your spend on expenses

Before you open your business you should determine the common expenses you are likely to incur so that you can establish how much money you need to best position your business for success. As a startup it's also important to remember that you willmost likely incur initial expenses that will need to be considered in your overall estimates.

Determine your spend on assets

Your assets will be made up of the initial investments made by your business necessary to get the ball rolling.

Ultimately the type of assets your business starts with will be largely dependent on the industry it operates in. For example, if you're opening an independent grocery store your assets will be made up of fixtures and fittings, cash registers, and possibly even delivery vehicles.

In addition to this, if you are making new products, you'll also need inventory on hand before you can start making sales and building revenue.

Estimate the time it will take to start up

Very rarely will a business open its doors and become an overnight sensation, so it's a good idea to take time into consideration when developing your estimates. Research your competition and market to determine how much space there is to grow and how quickly customers could embrace your product. This way you can determine the overall spend and cash reserves needed before starting your business.

For example, if you think your business will take three to six months before it starts to build a regular customer base you have to consider the cost of paying six months of fixed expenses when you make your estimates.

Planning for your new business can be a challenge, so before you start developing business plans and cash flow forecasts it's a good idea to first identify that you will have the budget and capacity to get the wheels in motion.  

Want to know more about planning or starting up? Here are some useful links that could help:

Connect with us to receive updates throughout the day:

Like us on Facebok Follow us on Twitter

Dun and Bradstreet AustraliaTop of page Dun & Bradstreet Australia Pty Ltd 2015 | D&B Small Business    *About Us    *Sitemap    *Advertise    *Privacy    *Terms & Conditions