Estimating the Cost of a Startup

Because the costs of starting a business are often underestimated, new entrepreneurs should consider completing, at a minimum, a few basic pro forma financial statements even before they attempt to estimate how much money they will need. In addition to a personal financial statement such as the one illustrated above, try preparing the following estimates for initial setup and projected monthly costs. 

Initial Setup Costs

Use the following worksheet to prepare an itemized estimate of how much it will cost to get your business set up. These will all be pre-opening expenses.

Schedule A: Initial Setup Costs	
Advertising	$	Promotion for opening the business	
Beginning inventory	$	The amount of inventory needed to open	
Building construction	$	The amount per contractor bid and other	
Cash	$	Requirements for the cash register	
Decorating	$	Estimate based on bid if appropriate	
Deposits	$	Check with the utility companies	
Fixtures and equipment	$	Use actual bid on all F and E	
Installing fixtures and equipment	$	Use actual bids	
Insurance	$	Bid from insurance agent	
Lease payment	$	Bid from real estate agent	
Licenses and permits	$	Check with city or state offices	
Miscellaneous	$	All other	
Professional fees	$	Include CPA, attorney, engineer, etc.	
Remodeling	$	The amount per contractor bid	
Rent, equipment	$	Amount to be paid before opening	
Services	$	Cleaning, accounting, etc.	
Signs	$	The amount per contractor bid	
Supplies	$	Office, cleaning, etc. supplies	
Unanticipated expenses	$	Amount for unexpected costs (10 percent of total)	
Other	$		
Other	$		
Other	$		
Total Setup Dollars Needed	$	Total Schedule A (Pre-Opening Costs)	

The First 90 Days Projected Monthly Costs

Prepare an itemized statement identifying both (1) your personal living costs and (2) the anticipated monthly costs of operating the business for the first three months. Include the following items plus any other expenses that you deem appropriate for your individual situation.

Personal Living Expenses

Make a family budget.  Look at your family’s fixed and variable living expenses. It’s important to know the amount of personal costs that you’ll have to cover during the startup phase of your business.

Schedule B: Personal Living Expenses	
Family Income	Month 1	Month 2	Month 3	Total	
Wages (take-home)	$	$	$	$	
Wages (take-home)—Spouse	$	$	$	$	
Interest and dividends	$	$	$	$	
Miscellaneous	$	$	$	$	
Total Income	$	$	$	$	
Family Expense Budget	Month 1	Month 2	Month 3	Total	
Auto expenses (gas, maintenance, etc.)	$	$	$	$	
Auto insurance	$	$	$	$	
Auto payment	$	$	$	$	
Beauty shop & barber	$	$	$	$	
Cable TV	$	$	$	$	
Charity	$	$	$	$	
Child care	$	$	$	$	
Clothing	$	$	$	$	
Credit card payments	$	$	$	$	
Dues and subscriptions	$	$	$	$	
Electricity	$	$	$	$	
Entertainment	$	$	$	$	
Gas company	$	$	$	$	
Gifts	$	$	$	$	
Groceries & outside meals	$	$	$	$	
Health insurance	$	$	$	$	
Home repairs	$	$	$	$	
Homeowner’s insurance	$	$	$	$	
Household	$	$	$	$	
Income tax (additional)	$	$	$	$	
Laundry and dry cleaning	$	$	$	$	
Life insurance	$	$	$	$	
Medical and dental	$	$	$	$	
Miscellaneous	$	$	$	$	
Mortgage payments	$	$	$	$	
Other debt payments	$	$	$	$	
Rent	$	$	$	$	
School expenses	$	$	$	$	
Telephone bill	$	$	$	$	
Tuition	$	$	$	$	
Vacations	$	$	$	$	
Water, sewer, trash collection	$	$	$	$	
Other	$	$	$	$	
Total Expenses	$	$	$	$	
Net Cash Remaining (Needed)
Total Schedule B	$	$	$	$	

Business Operating Costs 

At a minimum, estimate monthly income and expenses for your business’s first 90 days of operation.  

Schedule C: Business Operating Costs (First 90 Days)	
Estimated business income	Month 1	Month 2	Month 3	Total	Notes	
Total Income	$	$	$	$		
Monthly expenses	Month 1	Month 2	Month 3	Total	Notes	
Advertising	$	$	$	$		
Bank service charges	$	$	$	$		
Business insurance	$	$	$	$	Exclude the amount from Schedules A or B	
Credit card fees	$	$	$	$		
Delivery charges	$	$	$	$		
Dues and subscriptions	$	$	$	$		
Health insurance	$	$	$	$	Exclude the amount from Schedules A or B	
Inventory	$	$	$	$		
Lease payments	$	$	$	$	Exclude the amount from Schedules A or B	
Loan payments	$	$	$	$	Principal and interest payments	
Miscellaneous	$	$	$	$		
Office expenses	$	$	$	$		
Payroll other than manager	$	$	$	$		
Payroll taxes	$	$	$	$		
Professional fees	$	$	$	$		
Rent	$	$	$	$	Exclude the amount from Schedules A or B	
Repairs and maintenance	$	$	$	$		
Salary of owner or manager	$	$	$	$	Only if applicable first 90 days	
Sales tax	$	$	$	$		
Supplies	$	$	$	$		
Telephone	$	$	$	$		
Utilities	$	$	$	$		
Other	$	$	$	$		
Total Expenses	$	$	$	$		
Net Cash Remaining (Needed)	$	$	$	$	Total Schedule C	

Recap of Costs	
Initial Business Setup Dollars Needed (from Schedule A): 			
$________		
Operating Dollars Needed for First 90 Days (from Schedule C): 		
$________		
Total Dollars Needed for Setup and First 90 Days (sum of A + C): 		
$________             	
$________	
Additional Personal Cash Needed or Available (from Schedule B): 	                       		
$________	
Net Cash Needs for Personal and Business Survival during Startup and First 90 Days:                                                             		
$=======