01Set up the Startup-Costs Statement in a Financial Software Application
To create your startup costs worksheet, you will first need to format a worksheet in a spreadsheet application like Microsoft Excel.
Create a worksheet (page) in your spreadsheet software that lists out all of your startup costs. Put items down the left side and add costs in the column to the right. Organize and total up costs for each of these sections: Facilities, equipment, supplies and advertising, and miscellaneous. Add other relevant categories as well, such as labor or headcount. Create a grand total that sums up the costs for all sections. This will reveal the amount you will need for your startup.
Be as detailed as possible and include everything to get a better picture of what you will need. Don't forget wastebaskets, decorations, and any promotional items you hand out to let people know about your business. The more detailed you make your worksheet, the closer you will come to a true picture of your startup needs.
02Facilities Costs for Startup
Facilities costs are those related to your location, including your lease, utilities, construction, and any other costs for preparing the facility for your business use. Assuming you will have a commercial lease, your startup expenditures should include these items:
- Lease security deposit
Most commercial leases require an initial security deposit equal to one month or more in rent.
- Other Deposits
Include an amount for deposits on utilities and phone service.
- Tenant Improvements
Until you have settled on a location and received estimates on the cost to remodel the facility to suit your needs, you won't know this cost, so you will have to estimate.
Signage includes all exterior and interior signs. Estimate high; they are more expensive than you think.
- Other Facilities Costs
There may be other costs related to your facility, such as fees for appraisals or city/county taxes, that you will need to pay.
Note: The term "tenant improvements" or "TI" can also be expressed from an accounting viewpoint as "leasehold improvements," and from a construction viewpoint as "build-out." All three terms mean the same thing.
- Lease security deposit
03Business Equipment and Vehicles
The types of equipment needed for your business startup will vary depending on your type of business, but in general, these types of equipment will be needed:
- Office equipment and furniture for owners and employees
- Specialized equipment for manufacture, warehousing, or shipment of products
- Computers, software, and peripherals (printers, etc.) for office and other areas
- Phone systems, cell phones, and computer networking equipment
Determine Business Vehicles Needed
Depending on your business, you may need to lease or buy vehicles for:
- Manufacturing activities
- Cars for salespeople
- Cars for executives
These are just the initial costs of purchase, which should include costs for delivery, setup, and training (for depreciation purposes).
04Business Supplies and Advertising Materials
Include Supplies and Advertising Materials Needed
This section of your startup worksheet lists initial quantities of supplies and materials you will need to have on hand when you open your doors the first day of your business. It does not include ongoing purchases of supplies and materials (these will be included in your monthly budget). Include the following basics on your supplies list:
- Office supplies
- Janitorial supplies
- Supplies for manufacturing activities
- Supplies for shipping and mailing
- Stationery and business cards
- Advertising materials, such as brochures, flyers, other printed advertising material
- Costs for an advertising agency to prepare an ad campaign for your startup
- Design costs for advertising and web site
- Website setup
05Other Startup Costs
You'll need to include funds to cover certain administrative costs for necessary startup tasks:
- Fees for attorney to set up legal form of business, to assist with commercial lease documents, and other pre-startup negotiations
- Fees for CPA to set up bookkeeping system
- Local business licenses and permits
- Insurance deposits
There may be other costs you didn't expect, so include a comfortable amount as a buffer for any other miscellaneous expenses that might come up.
06Putting it All Together
Calculate the subtotals for each section above and create a grand total start-up costs statement. If you are contributing equipment, vehicles or other startup items to the business, itemize your contributions and deduct these from the total amount needed. The new total is the amount you will need to get financed for your startup.
Finally, remember that you can deduct startup costs from your first-year business taxes, so save all of your receipts.
How to Create a Startup Costs Worksheet
Every new business needs to determine startup costs as a part of its startup planning, and preparing the financial statements to include in your business plan need not be difficult. The most challenging part is gathering costs and making sure they are reasonable and adequate. It's always better to over-estimate expenses and underestimate income.
Following is a brief outline of the components you'll need to include in a startup-costs worksheet. Your worksheet should list all the facilities costs, equipment, initial supplies and materials, advertising materials, and miscellaneous costs you need to open your business. Once you understand all of the cost categories involved, you can verify that your plan has captured all of the expenses needed to get started.