June 2, 2008
As every new business owner is likely all too aware, initial capital funding is an essential component permitting a new business to be able to get off its feet. Indeed, entrepreneurs and new business owners alike are challenged by finding sources of funding during the startup phase.
Unlike existing businesses with a proven track record relative to cash flow, customer base and revenue stream, new businesses are often not profitable for at least the initial six to twelve months of operations. That said, a new business nonetheless faces the same economic realties of an existing business, such as the need to purchase inventory, pay employees, (including a salary to the new business owner until profitability is maintained,) and pay rent and other ongoing expenses. In addition, new businesses often have initial expenses such as equipment purchases, capital improvement and initial inventory expenses, which can be significant.
Accurate Startup Cost Estimates
A sound business plan for a startup company should consider any and all costs that will be incurred during the startup phase of the business, and then on an ongoing basis. Initial substantial costs will likely be incurred for such things as inventory, equipment and machinery purchases, leasing and/or other real estate expenses, marketing expenses, insurance premiums, specific costs such as franchise fees or license costs and initial payroll costs.
If you're considering starting a new business, it is wise to avoid...
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by: Jeffrey I. Fialky, Esq.
May 26, 2008