Amentes - Business Intelligence: Tips for Fostering Entrepreneurship At Any Age

Startup cost is important part of the business plan and I would like to write wider about it.

Startup cost should be very precise. Again we can look through an example:

When starting a company, you need to plan all assets you would require to operate. Would you require PC or laptop? Probably yes. You would also need internet connection, printer, telephone and others.

Take your team and sit down. Do the brainstorming and write on the paper all you may need and prices. Then put the lists together and cross out all you definitely would not need at first.

Then think about workforce. You will need to hire employees. Put their annual salary and insurance on the list.

Utilities? Sure. Electricity, gas and water must be on the list, even if you have just an office, or even run your business from home (you should know that if you run your business from home your utilities can be tax deductible expense).

Stationaries and miscellaneous should be on the list.

Well, you have a list of things you need. Your office is set up and workforce is hired. But you need supplies (stock, raw materials and other depending on industry), should it be on the list? Of course!

Now you have a list of the startup cost. But your investor will probably ask you to take half of these expenses. Best businesses starts without investments. Remember the business that started from the parents` garage? John brought table, Lisa computer, father gave us tools and we started.

Sure, you do not need to start from scratch but many investors would like to keep startup capital to the minimum. Truly, if you start dentistry you need to buy a lot of expensive equipment. But if you start website shop you do not need an office in the centre of the London and an iMac.

Reduce your startup cost as much as you can and you will see the right amount to ask.

When we speak about operating expenses we normally included some of them in the startup cost already.

Operating expenses are expenses you have in accordance with your day to day routine of the business (core operation). Expenses or costs can be fixed or variable . Fixed costs (expenses) are continuous and constantly paid money. Fixed are utilities, rent, salaries, licenses, domain and server. Variables are cost of materials, wages, and others that connected to the volume of sales.

Operating expenses are crucial in the Cash flow forecast. When writing a business plan you should be very careful in measurements. You need to put real prices and save equilibrium with the revenue. When writing a business plan, your annual closing balance highly depends on expenses you have to keep them to the minimum.

Cost management is an art and science (3 year of University). There are many doctorate works about cost management and still there is no unique solution. So, you have to find your own way here.