.When starting a business, you need to be able to estimate the startup costs of your new business. It is important that you know the money you need to open and run the business. Underestimating your startup costs can result in big difficulties, even failure of your business.
From the article “Estimate Startup Costs – 5 Tips” , here are rules to help you estimate the startup costs of your business:
- Have a solid plan — then change it because your initial assumptions prove to be unrealistic or not doable at this point
- Be willing to pull back, especially if your business proves to be bigger in cost than what you initially estimated or you really haven’t tested the demand for your product
- Calculate prices, time and initial cashflow correctly
- Correctly estimate your startup time, especially if you will be running on fixed costs before you can even start the business (e.g. web hosting fees while you are still designing the website, or monthly lease payments when you are still renovating the place)
- Be realistic about the cost of money; include cost of borrowing such as interest rates and other fees when you estimate your startup costs
Also read the article “Start Up Capital: Can You Afford to Start Your Business?”
