To determine how much money you need to start your business, you must estimate the costs of doing business for the first months. Some of these expenses will be one-time costs such as the fee for incorporating your business or the price of a sign for your building. Some will be ongoing costs, such as the cost of utilities, inventory, insurance, etc. While identifying these costs, decide whether they are essential or optional. A realistic startup budget should only include those things that are necessary to start a business. These essential expenses can be divided into two separate categories: fixed and variable.

Fixed expenses include rent, utilities, administrative costs and insurance costs. Variable expenses include inventory, shipping and packaging costs, sales commissions, and other costs associated with the direct sale of a product or service. The most effective way to calculate your startup costs is to use a worksheet that lists both one-time and ongoing costs.

2 Projection of Expenses 3 4 Amount Fixed Expenses Rent Explain how you arrived at this number 5 6 Utilities $ $ $ $ 7 Insurance 8 Regardless of the number of customers, yo Explain how you arrived at this number Amount 9 10 Total Fixed Expenses $ 11 Variable Cost Per Customer 12 Materials 13 Service & Sales Business: How much will it cost you to buy materials and/or services needed to serve each customer? $ 14 Sales Business: How much will it cost you to buy the raw materials or finished products that you wil manufacture or re-sell to each customer? $ 15 16 Total Mateials Cost $ 17 Labor 18 How much would you like to be paid per hour? $ 19 How many employees would you like to have working for you? 20 How much would you like to pay your employees per hour? $ 21 Service Business: How many customers do you expect to server per hour? 22 Sales Business: How many units of the product do you expect to sell to with these materials or services per hour? 23 Customers Served Per Hour 24 Total Labor $ 25 Total Variable Expenses or Cost Per Customer or Hour $ 26 The midpoint for your break-even point will be set at: 15.00 Projection of Revenue and Expenses 2 3 4 5 6 Fixed Expenses: $ Cost per Customer or Hour: $ Selling price per Customer: How much do you plan to charge each customer for your product or service? $