Costs to start businesses vary wildly according to industry, location, and size. Clearly, it costs more to start a car dealership than it does to start a lawn service. But when it comes to startup costs, you must plan for the unplanned.

We know that business planning can be a dry subject. Check out the 2011 film We Bought a Zoo starring Matt Damon and Scarlett Johansson. Damon and Johansson play a couple who purchased a zoo that had struggled under years of neglect. They quickly discovered that costs for maintenance and repairs, as well as feeding and veterinary care for the animals far exceeded expectations. As you might imagine, this created stress in business relationships, personal finances, and of course the marriage. The movie does have a happy ending, which we will not spoil. Check it out!

A good rule of thumb is to think in thirds.

  • Take all of your meticulously planned expenses. Now triple them.
  • Now imagine your best marketing projections of first year sales. Reduce that to about 1/3 of what you planned.

If you can still make it work, you have a viable chance.

To estimate all other fixed costs, plan for four primary areas.

  • Office, warehouse, restaurant or commercial space. We recommend Loopnet. Look at comparable property in your zip code and compute the average cost per square foot in those listings.
  • Salaries, which is usually the largest expense. Salary.com is a decent source of estimates.
  • Other costs, which may require a great deal of online research. Fortunately, Small Business Cost Helper offers a good deal of it in one place, saving you hours.
  • Marketing. A guideline is that a business spends approximately 20 percent of revenue on marketing. Costs for marketing are available from a number of sources, including Small Business Cost Helper and Fiverr , a source for graphic arts and a myriad of other freelance creative services.

We have created a book that walks you through expenses of operating your business, complete with fillable pages. There are many other costs and not all of these will account for your unique situation.

Finally, learn how to price correctly! Here is a secret. Adding a simple markup will drain your business of profits. Learn a few lessons from retailers who build appropriate profit margins into each product they sell. We will teach you the pricing secrets of retailers, from your neighborhood convenience store to Walmart, and how they maintain healthy bottom lines in this free video.

These tools will save hours of research. There are many more available on this site. Use it!

Happy planning.

Comment (1)

  • Conway West| August 20, 2019

    True! So many unknown expenses pop up along the way. Planning & budgets are important to getting started and maintaining growth. 👍🏻

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