Before you ever make your first sale, you’ll have bills to pay. Knowing how much those bills will be and which bills will come due more than once will help you determine how much funding you’ll need to get your business off the ground.
Depending on the type of business, your startup costs may vary, but there are a few that are common to all:
- Work space, including equipment, supplies, and utilities
- Licenses and permits
- Insurance and payroll expenses
- Advertising and marketing, including printed materials and website design
Make a list, and be sure to add in any expenses that are unique to your business. Once you have your list, divide it into one-time and recurring expenses.
One-time expenses are the initial costs of getting started. This might include opening a business bank account, paying for any permits and licenses, and any equipment you’ll need to run your business.
Recurring costs will be those that repeat, like payroll expenses, rental costs, utilities, and insurance. Breaking this list down by month will give you a better idea how much you’ll need to generate in income. Since most businesses can take a year or more to actually show a profit, you’ll need to have a plan for how you’ll cover these expenses.
Once you have an idea of what your total startup costs will be, you’ll know how much capital you’ll need to start making your business dream a reality.