Calculating Business Start-up Costs

Start-up costs refer to the total cash amount needed to get your business up and running.
List everything that you will need to pay for up front prior to launching your business. These can be separated into the following six main categories:

Capital costs

Capital costs include lease of premises, fixtures, fittings and furniture, equipment and vehicles, computers

Establishment fees

Items include setting up a legal structure for the business, accounting fees, registrations, permits, copyrights, trademarks, patents, website or logo design fees.

Cost of sales:

Costs involved with the Stock, raw materials, manufacturing equipment, shipping, packaging, shipping insurance, warehousing.

Initial operating expenses

Various types of business insurance, office supplies, licenses and permits, shipping and postage, product packaging, parking, rent, utilities and anything else you need to have on a daily basis to operate a business.

Sales and marketing costs

Printing of stationery, marketing materials, advertising, public relations, event or trade show attendance or sponsorship, trade association or chamber of commerce membership fees, travel and entertainment for client meetings, mailing or lead lists

Wages and benefits

Employee salaries, payroll taxes, benefits, workers compensation

Estimating the costs

It is better to overestimate than underestimate your start-up costs, but try to be as accurate as possible.

Discuss prices with your suppliers, contact the relevant government departments about any necessary registration fees, and speak to property managers about leasing costs.

You may find it helpful to speak to other business owners as quite possibly they’ve encountered some hidden expenses, especially in the early stages. So if possible, allocate an additional 10% of your budget to ‘miscellaneous’ expenses – just to be on the safe side! Also make sure you check out your industry’s trade association.

Once you have a good idea of what your start-up costs are likely to be, you’ll be in a good position to decide on the most suitable way to finance your business.

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