Calculating Start Up Costs for Your Business Plan

If you’re in the process of writing a business plan, then you've probably already learned that a big part of your financials will rest on calculating your start up costs.

In this article, we look at what you will need to consider when calculating start up costs, so that you can make sure your business plan is as accurate as possible.

Business Registration

When you write a business plan, you will need to include information about the legal structure of your business, as well as information about other mandatory and optional registrations. Make sure that you include those costs in your estimate of start up costs, and remember that in some cases, you may need a lawyer or accountant’s assistance.

Research and Development

If you’re creating a new product, or refining one that you’ve already invented, then you will need to include the cost of R & D in the start up costs section of your business plan. This could even include the cost of market research.

Stock or Materials

If you’re creating a business plan for a company that will sell items that are already manufactured, or a company that will manufacture goods, then you will need to start off with stock or materials. Make sure that you include the cost of the materials or stock you will need to get started in the start up costs section of your business plan.

Premises and Equipment

Whether you’re renting premises, or starting your business from home, there will be some costs involved in setting up the physical infrastructure of your business. Include things like office furniture, equipment and tools, the cost of installing telephone and internet lines, and all the other equipment you will need. Also include any costs involved in securing, remodelling, or decorating your premises in this section of your business plan. Remember to include the costs involved in securing and leasing your premises here too, and that it may be several months before you actually open your doors for business, so plan accordingly.

Marketing, Advertising and Promotion

One of the most important parts of your business plan is the marketing plan, and when you’re starting out, a significant portion of your spending will be on advertising and marketing. Make sure that you include the cost of that advertising and marketing in the start up costs of your business plan. Include things like business cards and flyers, newspaper advertising, setting up a website, and anything else that relates to marketing your business here.

Staffing

Whether you run newspaper ads or use a recruitment agency, there are usually costs involved in hiring people to work in your company. If they’re going to be starting before your company opens for business, their first few month’s salary will also be a part of your start up expenses. Include all of those costs in the start up costs section of your business plan.

Cash, the Cost of Financing, and Your Business Plan

Other costs that you will need to include in your business plan’s start up costs include cash to have in your business account or cash register when you open for business, the interest or costs involved in financing your business, and the cost involved in preparing your plan itself.

A good idea, when you are calculating start up costs to include in your business plan, is to carry a notebook and pen with you wherever you go. Whenever you think of something else that you will need in order to open for business, write it down. That way, you should be sure to cover all of the costs you will encounter. Also remember that you should always include a little bit extra in the start up costs section of your business plan, because there will almost always be something you forget!