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Calculating Start Up Costs

  • 24-03-2011 3:49pm
    #1
    chillywilly
    Registered Users, Registered Users 2 Posts: 2,794 ✭✭✭


    Hi Guys!

    I'm starting to write a business plan at the moment. I'm just wondering how many months should be accounted for in start up costs. For example if my rent and wages were €25,000 each for the year, should I calculate the whole €50,000 in to my start up costs or only for the first 3 months, or 6 months etc.

    Any help appreciated.


Comments

  • #2
    IPR_Iain
    Registered Users, Registered Users 2 Posts: 182 ✭✭IPR_Iain


    I would count start-up costs as those associated with setting up your business.

    Money spent in renovating the space, stock, services connections, till or computer those sort of things are start-up costs. Probably initial marketing too.

    When you work out your cash flow for the year, this is where you will see if you require extra funds to cover those costs like rent and salaries during your first year.

    Work out your costs against sales for the year and see if you are in a negative position throughout the year. If you are, then you can seek extra investment to cover those periods. Which may include the first few months.

    So your business plan would read

    start-up costs +
    cash flow
    = total investment required.

    If you are not in a positive position for the first year then include the second year as well until you reach a break-even point. These cash flow forecasts need to be done for 3 years to ensure you don't hit any brick walls further down the line.

    If you are good with Excel. See what happens if your sales are 20% below expectation and 50% below expectation.


  • #3
    IPR_Iain
    Registered Users, Registered Users 2 Posts: 182 ✭✭IPR_Iain


    oh, and good luck


  • #4
    Lantus
    Registered Users, Registered Users 2 Posts: 3,027 ✭✭✭Lantus


    chillywilly wrote: »
    Hi Guys!

    I'm starting to write a business plan at the moment. I'm just wondering how many months should be accounted for in start up costs. For example if my rent and wages were €25,000 each for the year, should I calculate the whole €50,000 in to my start up costs or only for the first 3 months, or 6 months etc.

    Any help appreciated.

    A typical business plan time period is 3 years. As you are starting the start up costs are thos costs that allow the business to get up and running. Then you will have you wages, rents, bills, other expenses which are recuring every month or so which will be cash flow. This will be offset by your projected sales or income.


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