Posts Tagged ‘Start Up Costs’


February 3, 2015 Leave a comment

As promised, I’m resuming with the pre-business list, and next up is Start Up Costs (SUC). Start Up Costs is basically everything your business venture requires to get up and running. If you’re a serious entrepreneur, it will be a part of the Financial Analysis section of your business plan.

I’ll segue here, just in case I haven’t previously emphasized the importance of a business plan. It is absolutely crucial. It is your road map, and possibly one of the most important documents you will ever own. A good business plan should have an Executive Summary, Company Overview, Market Plan, Operations Plan, Financial Plan, and Corporate Image Package (CIP). The Financial Plan should consist of the balance sheet/personal networth statement, start up costs (SUC), revenue model, projected income statement (profits and losses), and projected cash flow/projections (monthly, 1 year and 3-5 year projections).

The Executive Summary and Financial Plan are the two most important sections any investor worth his/her salt would want to inspect first, more so the financials. Therefore, do not make the mistake of educated guesses or guesstimations; not only will that reduce its credibility, but you will grossly underestimate what is required, and consequently run out of money. Hence, when preparing your SUC, you have to really take the time to think everything through, make a list and do your research on the costs/prices of the requirements.

Generally, your SUC should basically center around current assets (like cash-in-bank, and inventory) and fixed assets (like equipment, and office space). By way of example, a standard SUC sheet should contain: furniture – abc amount, internet/telephone set up – xyz amount, consultation/license fees – abc amount, desktop computer/laptop – abc amount, car/van – xyz amount, and so on. You should even list assets required that you already own and their current values., as well as prepaid expenses, like company registration fees, and so on.