Costs of Setting Up the Business

This is where we help you get down to figuring out how much it will cost you to open your doors for business on day one.

Before you dive in, you may want to take a look in the Business Tools at an initial cash requirements worksheet for the new business. It's a list of all the things you need to consider when figuring out your startup costs. The worksheet is set up to be used for forecasting your cash requirements for the start up of your new business. We've formatted the worksheet and put in most of the cash requirement categories for you. All you have to do is put in your numbers and print it. Once you've downloaded the worksheet, you can modify it to fit your own needs.

Your startup costs can be broken down into the following categories:

• hiring professionals— the cost of a lawyer, accountant, and perhaps other professional help
• getting insurance— the cost of protecting your business and personal assets
• planning your advertising and marketing— the cost of getting your product or service known in the marketplace
• hiring employees— the cost of hiring people to perform necessary tasks for businesses that require it
• planning the physical space— the cost of setting up your office, store, or other location
• special considerations for retail businesses— some of the special cost considerations of opening a storefront business, if that's your avenue
• miscellaneous costs— a look at those costs that any business will incur but that are often ignored or forgotten
• raising money— the cost of obtaining startup money, as well as some suggestions for potential sources of financing

The first time you go through the costs to start up your new business, you don't need to be particularly precise. You can just "ball park" the amount to get a rough idea of your expected startup costs. To figure out how much you'll need for the first few months of operation, see working capital needs.

Work Smart As you work through these topics, don't forget that your accountant can be a great source of information for helping you make startup cost estimates. If your accountant has small business experience, he or she should be able to tell you whether your estimates are on target.