Identifying your startup costs
Successful businesses have good planning. The success of your business relies on this. You need to know the costs involved in starting your business ready to trade on day one.
The type of business you are setting up will determine some of the types of startup costs for your business. If your business sells products you will need to source the product(s) as well as determine the quantities required. Over-stocking can negatively impact your cashflow. Manufacturing your product(s) will require machinery to produce the product(s), so how will you finance the acquisition of the machinery?
In addition to your one-off costs, you may also have ongoing costs, such as rent, telephone expenses, equipment leasing etc.
As you are unsure what level of sales you will be able to achieve in the first few months of your business, it is suggested that you should calculate the ongoing costs for three months, and also include your start up costs in that calculation.
By planning out your revenue, start up costs and ongoing costs, you will be in a position to understand how much cash you will have available to cover the costs, and any shortfall or surplus.
You may have a great product or service and plenty of passion, but you will not succeed if you do not have enough startup capital.
To help plan for the startup costs in your online small business, test your skills by playing our startup cost game!
Alternatively there is a PDF version of the answers in the Downloads area.
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