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Projecting Startup Costs

How much to get your business off the ground? Get real when it comes to accurately projecting your startup costs.


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

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

If you're not sure exactly what you'll be spending moneyon, be sure to make that part of your due diligence. When youresearch other businesses in your industry and area, try to uncoverany general expenses that you might not have thought of, saysPerkins. Seek the advice of an accountant or a lawyer, ideally onewho has experience with small businesses, he says, and getinformation from your local SBA and Small Business DevelopmentCenters.

During your startup phase especially, you need at least sixmonths of working capital on hand, suggests Perkins. Set measurablegoals for how much money you plan to bring in, and be prepared tomake changes to your expenses based on that. Bottom line--plan forthings to cost more than you think, and you won't be flooredwhen those bills start crossing your desk.

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