businesses

9 in 10 New Businesses Fail

New entrepreneurs should consider completing, at a minimum, a few basic pro forma financial statements even before they attempt to estimate how much money they will need.
How to Estimate the Costs of Starting a Business - Because the costs are often underestimated, we've created some helpful guidelines.

Improve your chances of success by retaining advisors that have been through the processes before and can help you avoid common pitfalls.

3 Schedules to Help You

Accounting for profits and losses
Initial Setup Costs

Use the following worksheet to prepare an itemized estimate of how much it will cost to get your business set up. These will all be pre-opening expenses.



Schedule A: Initial Setup Costs

Advertising $     ____________________      Promotion for opening the business
Beginning inventory $     ____________________      The amount of inventory needed to open
Building construction $     ____________________      The amount per contractor bid and other
Cash $     ____________________      Requirements for the cash register
Decorating $     ____________________      Estimate based on bid if appropriate
Deposits $     ____________________      Check with the utility companies
Fixtures and equipment $     ____________________      Use actual bid on all F and E
Installing fixtures and equipment           $     ____________________      Use actual bids
Insurance $     ____________________      Bid from insurance agent
Lease payment $     ____________________      Bid from real estate agent
Licenses and permits $     ____________________      Check with city or state offices
Miscellaneous $     ____________________      All other
Professional fees $     ____________________      Include CPA, attorney, engineer, etc.
Remodeling $     ____________________      The amount per contractor bid
Rent, equipment $     ____________________      Amount to be paid before opening
Services $     ____________________      Cleaning, accounting, etc.
Signs $     ____________________      The amount per contractor bid
Supplies $     ____________________      Office, cleaning, etc. supplies
Unanticipated expenses $     ____________________      Amount for unexpected costs (10 percent of total)
Other $     ____________________     
Other $     ____________________     
Other $     ____________________     
Total Setup Dollars Needed $     ____________________      Total Schedule A (Pre-Opening Costs)



After You Have The Pre-Opening Costs Total, Next
Look at The First 90 Days Projected Monthly Costs
Next, prepare an itemized statement identifying both your personal living costs (see Tab 2 above) and the anticipated monthly costs of operating the business (see Tab 3 above) for the first three months. Include the items listed plus any other expenses that you deem appropriate for your individual situation.

Accounting for profits and losses
Personal Living Expenses
Make a family budget. Look at your family's fixed and variable living expenses. It's important to know the amount of personal costs that you'll have to cover during the startup phase of your business.

Schedule B: Personal Living Expenses
Family Income Month 1           Month 2           Month 3           Total
Wages (take-home) $ $ $ $
Wages (take-home) Spouse $ $ $ $
Interest and dividends $ $ $ $
Miscellaneous $ $ $ $
Total Income $ $ $ $
Family Expense Budget Month 1 Month 2 Month 3 Total
Auto expenses (gas, maintenance, etc.) $ $ $ $
Auto insurance $ $ $ $
Auto payment $ $ $ $
Beauty shop & barber $ $ $ $
Cable TV $ $ $ $
Charity $ $ $ $
Child care $ $ $ $
Clothing $ $ $ $
Credit card payments $ $ $ $
Dues and subscriptions $ $ $ $
Electricity $ $ $ $
Entertainment $ $ $ $
Gas company $ $ $ $
Gifts $ $ $ $
Groceries & outside meals $ $ $ $
Health insurance $ $ $ $
Home repairs $ $ $ $
Homeowner�s insurance $ $ $ $
Household $ $ $ $
Income tax (additional) $ $ $ $
Laundry and dry cleaning $ $ $ $
Life insurance $ $ $ $
Medical and dental $ $ $ $
Miscellaneous $ $ $ $
Mortgage payments $ $ $ $
Other debt payments $ $ $ $
Rent $ $ $ $
School expenses $ $ $ $
Telephone bill $ $ $ $
Tuition $ $ $ $
Vacations $ $ $ $
Water, sewer, trash collection $ $ $ $
Other $ $ $ $
Total Expenses $ $ $ $
Net Cash Remaining (Needed)

Total Schedule B

$ $ $ $


Accounting for profits and losses

Business Operating Costs


At a minimum, estimate monthly income and expenses for your business's first 90 days of operation.

Schedule C: Business Operating Costs (First 90 Days)
Estimated business income Month 1      Month 2      Month 3      Total      Notes
Total Income $ $ $ $
Monthly expenses Month 1 Month 2 Month 3 Total Notes
Advertising $ $ $ $
Bank service charges $ $ $ $
Business insurance $ $ $ $ Exclude the amount from Schedules A or B
Credit card fees $ $ $ $
Delivery charges $ $ $ $
Dues and subscriptions $ $ $ $
Health insurance $ $ $ $ Exclude the amount from Schedules A or B
Inventory $ $ $ $
Lease payments $ $ $ $ Exclude the amount from Schedules A or B
Loan payments $ $ $ $ Principal and interest payments
Miscellaneous $ $ $ $
Office expenses $ $ $ $
Payroll other than manager $ $ $ $
Payroll taxes $ $ $ $
Professional fees $ $ $ $
Rent $ $ $ $ Exclude the amount from Schedules A or B
Repairs and maintenance $ $ $ $
Salary of owner or manager $ $ $ $ Only if applicable first 90 days
Sales tax $ $ $ $
Supplies $ $ $ $
Telephone $ $ $ $
Utilities $ $ $ $
Other $ $ $ $
Total Expenses $ $ $ $
Net Cash Remaining (Needed)  $ $ $ $ Total Schedule C


Recap of Costs
Initial Business Setup Dollars Needed (from Schedule A):
$________
Operating Dollars Needed for First 90 Days (from Schedule C):
$________
Total Dollars Needed for Setup and First 90 Days (sum of A + C):
$________

$________
Additional Personal Cash Needed or Available (from Schedule B):
$________
Net Cash Needs for Personal and Business Survival during Startup and First 90 Days:
$=======
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