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Projecting Your Startup Costs

Get real when it comes to accurately figuring out just what it'll cost you to get your business off the ground.
Magazine Contributor
2 min read

This story appears in the September 2004 issue of Entrepreneur. Subscribe »

Do you know how much it will cost to get your business off the ground? The SBA recently asked a group of entrepreneurs in the process of starting businesses exactly how much they expected to spend on startup. Solo entrepreneurs projected costs at $6,000 (the median), while team ventures projected $20,000.

Are those realistic estimates? It depends on your business, say the experts. To get the most realistic estimates of startup costs, start with a detailed business plan, says Tom Perkins, business coach, motivational speaker and founder of the Virtual Business Manager in Portsmouth, New Hampshire. Categorize absolutely everything that will cost you money, from build-out costs and equipment leases to rent and utilities for office space. "A lot of times, people don't actually get a fair overview of what's really involved in the [startup] expenses," says Perkins.

If you're not sure exactly what you'll be spending money on, be sure to make that part of your due diligence. When you research other businesses in your industry and area, try to uncover any general expenses that you might not have thought of, says Perkins. Seek the advice of an accountant or a lawyer, ideally one who has experience with small businesses, he says, and get information from your local SBA and Small Business Development Centers.

During your startup phase especially, you need at least six months of working capital on hand, suggests Perkins. Set measurable goals for how much money you plan to bring in, and be prepared to make changes to your expenses based on that. Bottom line-plan for things to cost more than you think, and you won't be floored when those bills start crossing your desk.

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