It’s very important to determine how much cash your new business will need to open and operate smoothly. Therefore, you must know how much capital you will need in order to cover all business expenses until you will reach the break-even point. Note that your business should have enough cash to cover all projected expenses for at least six months.
In this assignment, you will create a list of all your projected expenditures. The following steps can help you get started:
- First Step– List of all needed assets (equipment, furniture, fixtures, supplies, software) and people needed to start and operate your business
- Second Step– List startup costs for inventory, marketing, sales, permits, needed market research, licenses, certificates, initial investment, legal fees, or professional charges
- Third Step– Compute your monthly (min. 6 months) fixed expenses such as rent, insurance, utilities, phone, lease, health insurance, loan payments, taxes, Internet, shipping and other services,
- Last Step– Estimate your salary, employees or hired contractors
This assignment will also help you to develop some sections of your Business Plan (Start Up and Running Costs sections).
Please note, the startup costs will depend on the type of the business and industry that you are planning to enter.
Therefore, the amount of projected expenses in the various categories may also very across industries.
Submission Format
- Include a table with all projected monthly expenditures for at least 6 months.
- Briefly explain your Start Up Costs items to include at least one source.
Projected Start Up Costs Sample
| Business Start Up Costs/ Month | January, 2017 |
| Assets: | |
| Cash | $ 11,000 |
| Inventory | $ 5,600.00 |
| Equipment | $ 2,800.00 |
| Auto | $15,000.00 |
| Other assets | $ 0.00 |
| Subtotal | $ 34,400 |
| Expenses: | |
| Rent | $ 1,500.00 |
| Lease deposit | $ 1,700.00 |
| Marketing | $ 2,500.00 |
| Legal fees | $ 700.00 |
| Consulting fees | $ 500.00 |
| Miscellaneous | $ 1,100.00 |
| Total Start Up Costs | $ 8,000.00 |
| Financing (Owner’s Equity and Liabilities) | |
| Owner Initial Investment | $ 12,400.00 |
| External Investment | $ 3,000.00 |
| Total Equity Financing | $ 15,400.00 |
| Bank Loan | $ 9,000.00 |
| Line of Credit | $ 2,000.00 |
| Total Liabilities | $ 11,000.00 |
| Total Equity Financing and Liabilities | $ 34,400.0 |
