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Calculating business expenses before you start your small business venture is crucial to your financial success.


If you’re dreaming of being your own boss and starting a new small business, you’re probably thinking about all the things you need to do to open shop, deploy your app, or launch your website. Whether it’s a craft brewery or marketing consulting service, you’ll have plenty of items on your to-do list. But planning ahead and crossing off those items now instead of later is critical – especially when it comes to the financial expenses you’ll need to cover for your new company. Both your personal and business finances will need to be in order to give you the best shot at success. To find out how to calculate business expenses, read on. It may be easier than you think with our step-by-step guide.

Finances: They’re Personal Too

Before you get too far down the road thinking about your business finances, you should take a hard look at your personal accounts and confirm they’re in the clear. Doing so will help you understand the expenses you have outside of your business and how your overall bottom line will affect your personal bank account. Remember to be diligent and detailed – after all, taking the time to do the math first can help ensure you don’t end up facing debt that may be tough to get out of even once your business is up and running.

To evaluate your personal finances for getting ready for your business, determine how much money you have in savings and how long it will last you while you’re still in the initial phases of launching your company. Ideally, you should have approximately 24 months of savings to cover your living expenses.

It’s also important to have accurate numbers while you’re crunching your routine personal expenses. This means going back and looking at bills you’ve received over the past few months to gauge how much you’ve been spending out of each paycheck. Make sure to take everything from utility bills to credit card debt into consideration while doing the math.

If you have student loans, you may be able to defer for a certain amount of time or at least consolidate your loans (depending on the type of loan) by filing for economic hardship as you try to start a business. This can help relieve you of monthly education loan debt, which can be one of your biggest bills and financial issues to tackle.

Examples of Start-up Costs

After hammering out your personal finances, you can move forward and calculate your business expenses. Note that your numbers likely won’t be perfect at this point since they’re projections, but it’s always better to have a starting point.


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Examples of start-up costs for small business include fixed and variable costs.

Examples of Fixed Costs

Fixed costs are bills that are set in stone, such as rent and insurance.

  • Rent. The cost for the office space or commercial property you’re using.
  • Equipment and supplies. These will obviously depend on the type of business you’re running. Some companies will have more costs than others. Researching the equipment you’ll need, including price, will help you determine this cost. Consider equipment leasing if the purchase price is a challenge.
  • Utilities. Internet and phone service are two necessities for doing business, and you can even speak to potential suppliers about their fees ahead of time so you can determine how much money you will need to spend. Be sure you know what utilities are and aren’t included in your rent.
  • Insurance. Your parents were right when they said it’s always best to have insurance. Costs vary but it’s better to be safe than sorry.

Examples of Variable Costs

Variable costs can be defined as expenses that fluctuate, such as shipping and distribution.

  • Market research. Investigating your potential consumers prior to opening can give you a better idea of how to market your products and services to your target audience.
  • Technology. This one also depends on your type of business but may include the cost of a website, information systems, and software (including accounting and payroll software).
  • Shipping and distribution. If you have a product you’re selling, you’ll need to pay for shipping and distribution costs to deliver it to your customers.

Examples of Unexpected Costs

  • Licenses and permits. If you’re operating a store or food/beverage establishment, you’ll likely need a series of licenses and permits in order to run your business. Everything from health codes to fire inspections must be accounted for when calculating your start-up costs to ensure that you don’t run into trouble with the law once you open.
  • Consultants and experts. If you have little experience in entrepreneurship, you may want to consider hiring someone with a background in the industry to help you craft items such as your business plan or marketing and advertising strategy.

Learn more about start-up costs from the SBA.

Once you have a detailed list of known start-up costs, you can take it one step further by categorizing each expense and adding them up to determine the grand total.

Setting up for Success

Now that you have the information to calculate start-up costs for a small business, and you’ve crunched your numbers and have a better idea of approximate costs you’ll encounter, you can look into financing options. If you’re ready to secure financing now, Guidant Financial can help you pre-qualify quickly and easily.


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