Initial Costs of Starting in Business
If you are starting in business it is important to avoid the pitfall of underestimating your start up costs. In order to assist you with identifying which expenditures you may incur visit our start up cost-calculator and calculate your initial costs. The calculator lists some of the more common costs; you may know of others or wish to include an estimate for those unexpected initial costs.
Start up costs are limited to expenditure incurred before you are ready for business on the first day. They don’t include the running costs, the cost of owners’ remuneration or any initial costs not incurred before trading commences. For this the business will need to calculate the ‘working capital requirement. The business should have a cash flow plan (a money map) prepared in order to identify how much working capital funding the business requires. It is a fact that customers don’t always pay when they should and suppliers to new businesses press hard for prompt payment.
Did you know? It is possible to make a profit and still go out of business because of lack of cash. The initial costs will be factored into your cash flow plan as will the repayment of the funding incurred in starting the business.