When starting a new business, it is important to be organized and ready to hit the ground running from day one. A big part of being ready to open for business is having a budget in place for the startup phase, as well as an estimate of ongoing expenses so you know how much revenue you need to make the business profitable.

When it comes to the startup budget, several items must be included. Failure to include all necessary items could result in your expenses coming in over budget, causing a deficit in the beginning stages and jeopardizing the overall viability of the business.

Going from Concept to Operational

The startup phase of your organization encompasses the time, energy, and expense needed to take your business idea and turn it into a reality. During this period, you will need a comprehensive budget covering all areas of the operation, including:

Research & Development (R&D): Your R&D expenses will include the resources necessary to create a prototype of your product, as well as a marketable version of it. If you are selling an existing product or marketing a service, then there will be no prototype needed, but you will still need to perform a market analysis to determine the local interest in the product/service, as well as the level of competition. Hopefully, you are carving out a niche in an area with a moderate level of competition, but with demographics that are favorable to your product or service offerings.

Location: The cost of the facility where you will locate varies depending on the type of business. For example, if you are opening a retail store, you will need to consider the location as it relates to traffic levels and area demographics. If you are manufacturing a product, location will not matter as much but you may need a larger facility to house all the equipment needed to run the operation. Other related costs may include leasing, utilities, security deposit, renovation, and signage.