Adam Deering Start-up Advice Part 2: Calculating Costs

Adam Deering - Calculating Costs

Hello again, Adam Deering here.

Last time we got well on our way into the ins and outs of financing a new business, in which I discussed start-up costs and considerations. So moving on from how to start keeping spending down, this article will mainly discuss calculating operating and start-up costs.

Calculating Start-up Costs

So, you’re doing everything you can to keep spending to a minimum – working from home and only purchasing necessary items for your business. But planning and taking into account all your expenditures for the next 12 months is no easy feat.

When it comes to calculating the costs of starting and setting up your business you should try and include as much detail as possible. Be prepared and make note of your spending – this will help you to avoid surprise costs down the line.

Be Prepared

Remember start-up costs could include anything you might use for your business, including vehicle costs, road tax, insurance, equipment, software, installation, stock, marketing, advertising, legal fees, licences, accountant hire and more. So it’s vital that you try not to miss anything in your cost calculations.

You may wish to itemise start-up costs for inventory, sales, research tools and permits, whilst factoring in your salary and potential employees’ wages too. But remember that whilst listing is a great practice, remember to be realistic – there’s no use in falsifying the price of items and services. It’s always a good idea to assume everything will cost more than you presume it will be.

Again, to keep costs down, do your research, don’t just use the first price you find on the internet.

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Next time: I’ll be discussing the use of cost calculations to work out total overheads (or fixed costs as they are known).

For more information and updates like this, be sure to follow me, Adam Deering, on Twitter. 

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