How to calculate the cost of starting a business from scratch

Of course the cost depends on your business model and the chosen sector. However, a useful estimate based on a study by the Ewing Marion Kauffman Foundation in 2009, puts the average cost of starting a new business from scratch in little more than $ 30,000.

Many small businesses and particularly Internet businesses from home or just need a few thousand to start. But leaving aside the averages, what can you do to calculate startup costs?

Before making any estimate is important to understand how the startup costs are classified. To determine startup costs (ie, the period prior to start generating revenue) should identify two types of expenses you will incur business

To estimate startup costs, start by creating two lists: one for expenses and other current assets. Your list should be made of the associated costs during the start-up phase of your business, such as improvements in facilities or equipment and inventory you need. But do not forget to consider items such as brochures, business cards and development costs of a website or any security deposit you need to do. Please also note if you need the help of a financial adviser or a lawyer to begin.

Then these costs classified as essential or optional: Think You really need to spend money on this before have some sort of income?

This is the moment of truth, allocate costs to your list of “things to do” for the launch. This process will always have some “divine eye” but is best to be as realistic as possible and use past experience, research and the advice of other entrepreneurs like guide your cost estimates. Organizations such as SCORE and your Development Center Small Local Companies can provide free and valuable about how to calculate the initial costs advice.

If you use a smartphone, another option that you can be useful is the SBA mobile application that includes a tool to calculate startup costs.

Whatever you do, do not underestimate the costs, or try to adapt costs to the amount of money you have available. If the costs are too high, consider another method of starting a business.