How to Open Doors and Stay Open
How much cash will you need to launch your new business idea? Startup cost are any expenses incurred in starting your business. Sunk cost (spend money to make money) is a cost that has already been incurred and can never be recovered. Understanding your sunk cost will allow you to save money and not make the same mistakes twice. It is important to start small. In the first stages, you should have minimal expenses and try to be resourceful towards your business investments. The goal is to be a profitable business and a general rule of thumb is to reach a 10% net profit margin.
Typical small business startup costs to consider and plan for:
Initial costs may include:
- Business Bank Account
- Rent/lease deposit
- Improvements/remodeling
- Web design/brand design
- Legal and professional fees
- Starting inventory
- Furniture/equipment
- Licenses/permits
- Software applications
Recurring costs may include:
- Telephone/utilities/internet/data
- Rent/Lease payments
- Advertising/marketing
- Social Media
- Salaries/payroll taxes
- Supplies
- Bookkeeping
- Insurance
- Software subscription services
Sunk Cost may include:
- Research and Development – For example product development of a new product that never sells.
- Marketing Expenses – For example failed marketing campaign
- Equipment Expenses – For example replacement of machinery
- Payroll expenses – For example employee/certification training
Below you will find tools to help guide you to calculate cost and budgeting:
- Calculate your startup cost: https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs
- Monthly Expenses: https://www.thebalancesmb.com/dont-forget-these-monthly-business-expenses-397485