Reference no: EM132214792

Your first financial decision is to determine how much money it will take to open the doors. You may find that the amount is reasonable or too high. Sometimes the amount seems reasonable and obtainable, but you decide that the potential profit isn't worth the work. Startup costs need to be estimated then operating expense, and revenue streams need to be determined. Differentiate Start-up Costs From Operating Expenses Start-up Costs are one-time costs of Assets that usually won't recur for at least one year, likely longer or sometimes never: Remodeling - 1 year Equipment - e.g. computer, 3 years Truck 5 years Building - 20 years Operating Expenses are uses of some part of your Assets that recur predictably, usually measured on a monthly basis. Rent Utilities Advertising Salaries and wages CGS (Cost of Goods Sold) Etc. Why estimate start-up costs? Determine total dollar amount needed to start your business Determine appropriate type of financing Assess risk, feasibility, and personal investment Have better information to help make decisions.