Adding up your startup costs

As you get started with your small business, calculating your startup costs is one thing that you must do. Startup costs allow you to see how much money you need to acquire from lenders and then you will move forward with additional loans in the future for expansion. The problem that most small business owners face is that there is not a "formula" that allows them to calculate their startup costs because it is different for every organization. Do you need money to help build up your inventory to get started or will you be able to get by with just the basic startup supplies that help you generate just enough cash flow to cover your expenses?

With so many different things to consider pertaining to your startup costs, it can take some time for you to calculate all of them and to ensure that you have the right number. Start with a list of all of your expenses from rent to your inventory purchases. This will give you plenty of money to provide for the business needs so you won't be hurting for anything. Consider the one-time costs you will need like creating a sign for your building along with any renovations to the property where you are locating your business. As you get all of these expenses together, it will be much easier for you to find a way to get in touch with the right lender that can help.

There are different types of expenses. Some you have deal specifically with the startup needs of the business while others are centered around the other needs like your ongoing expenses of insurance, inventory, and utilities. To improve your chances of getting a loan, you want to separate the ongoing expenses from your startup costs. You will need to include the first 2-3 months of expenses in the startup costs but don't get greedy with the loan and start asking for higher amounts as it can really take its toll on your company's ability to get a loan.

Realistic startup budget numbers include the numbers that are needed to get your business started. This allows lenders to see just how much you really need and how much you will work to get the rest of the money to move your business forward with hard work.

In order to make it easy to acquire all of these costs, place them all into a worksheet like an Excel spreadsheet. This will allow you to organize them and to easily reference them. You can also make final adjustments and print them out right before you are ready to head to the lender to ask for the loan.

What about the costs that you don't know? Since you aren't yet in business it can be a bit of a challenge to acquire accurate numbers that best represent your company. You will need to estimate some of these numbers but you can get them from doing a little research online or even asking other small business owners in your area for help. Many of them will have information about the taxes and other costs for your area or you can also ask your city offices for these figures.

Depending upon the lender you are working with, your costs will vary and the amount you apply for will vary. You need to consider keeping the asking amount low in order to improve your chances of getting a loan. Lenders will offer financing based on the numbers you provide but also on other factors like your business plan. They need to be sure that you are going to repay the loan and that you aren't asking for too much money that you really don't need.