Many of you small business owners might think that the Wall Street Journal is for the big business people but you should be aware that many articles and some sections focus on small business in a big way. Recently, I came across this article from the WSJ on calculating start-up costs for your new business. Since many of you are unintentional entrepreneurs these days or you have that awesome idea but need to figure out how much it is going to cost to start the business.
Start with a Brainstorm
The WSJ article says “A smart way to start is to brainstorm everything you’ll need, from tangible goods (such as inventory, equipment and fixtures) to professional services (such as remodeling, advertising and legal work). Then, start calculating how much you’ll need to pay for all those goods and services.”
Understand the Categories
The WSJ article goes on to list the basic categories to calculate the costs for opening and operating a small business:
Location. Think about how much you’ll need to pay for rent, to make improvements to the space or for full-scale renovations.
Inventory. Figure out the cost of raw materials, plus any production costs, or the wholesale prices of products you’ll be selling. Calculate shipping and packaging costs, sales commissions and other costs related to the sale of your product.
Equipment. Add up how much it costs to buy or lease computers, copiers, telephones, heavy-duty machinery or other fixtures.
Employees. Calculate salaries and wages, plus benefits you would offer, and don’t forget payroll-related taxes, overtime pay and workers’ compensation.
Marketing. Figure out how much you’ll pay for new stationery, marketing materials, advertising campaigns, the sign above your door and meals or entertainment with clients.
Administrative and operational costs. Keep track of how much you’ll need to pay for insurance (to protect against property damage, business interruption and floods) and office supplies. Don’t forget utilities, a commonly overlooked expense, and other charges, such as phone and Internet service, cleaning and property maintenance.
Professional fees and permits. Add up how much you’ll pay for your attorney, accountant or other advisor or consultant. Factor in what you’ll need to pay for permits or licenses related to your business.
Ready to get started? Get a worksheet and get to work
To help you along, the Better Business Bureau has put together a great starter worksheet here. If you want to get more good data on starting up, check out the UnintentionalEntrepreneur.com site for more information.
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