Want a start a business, but how can I estimate costs?

Let's face it. You go into business to make a profit, that's essential if you are going to stay in business. But how can you tell whether or not you will make a profit? You need to seriously research the costs so you get a good picture of things!

There are many things that have to be taken into account in order to arrive at a fairly accurate estimate of the annual costs of running a business. When starting a new business, you will need to spend some time researching the likely costs, so that you can estimate your weekly or monthly "break-even" point.

You can use the following list of costs to help prepare your estimate. Not all costs will be applicable to every business, and depending on your particular business, there may be additional items which need to be considered. Only YOU after you research will figure out most of the costs you are looking at! Make sure you realize that you may need some wiggle room as well, because there will be things you didn't count on!

If you are planning something OUT of the home:

Establishment costs

fit out
sign writing
phone & fax
power, water & gas
equipment && furniture
rent / lease in advance
security deposit
stock / raw materials
advertising & promotion
licences & permits

Premises (Your place of business if out of your home)

rent
rates & taxes
mortgage interest
repairs & maintenance
security services
insurance, buildings, public liability, professional indemnity
cleaning


Employees (if that is what you plan on)

wages, salaries, bonuses, overtime
holiday pay
sick leave pay
long service leave provision
fringe benefits
workers compensation insurance
staff training
clothing, uniforms, personal protective equipment, etc
staff amenities
superannuation

Trading

stock & raw materials (could be wholesale items, or materials for your crafts that you plan to sell)
bank fees & interest (business accounts are a bit different that personal!)
leasing or hire purchase (if you plan to do this see which is better for you in the long run. At times your accountant can help you figure this in)
maintenance of plant, machinery, vehicles, etc (if you need this)
motor vehicle, registration & insurance, running costs, etc (Depending on HOW you set your business up these can be write offs)
depreciation
advertising & promotions (where are you going to advertise? What promotions do you plan?)
market research
provision for bad debts (Its GOING to happen!)

Administration

phone & fax
postage
stationery & printing
office supplies
insurances
office equipment, maintenance, service, depreciation
accountancy fees
Directors' fees (for companies)
solicitors fees & legal expenses
selling commissions & retainers
packaging
delivery & freight costs
contractors & sub-contractors
equipment hire
licences & permits
inspection fees
workshop tools, parts, etc
professional memberships & subscriptions (remember these are available online as well! They are useful tool, and if you do any business offline - check out your local Chamber of Commerce!)
payroll tax
Website costs

Keep in mind not all of these items may exist in what you are planning, but there are some that everyone uses! Try to estimate your costs so you know what you are looking at!