Knowing how much money your business needs to get started is the first thing potential investors will see in your business plan. Before you begin, learn how to calculate the percentage of your new business’s starting cost and determine the most economical way to do it.
When you start a new business, you should keep in mind that whether you generate income or not, you will have regular and recurring expenses. For your business to be profitable, you need to make fixed costs variable over time.
Grab a pen and paper and start calculating the percentage of start-up costs for each company!
Calculating your company’s acquisition cost percentage depends on your business model and industry, although an internet company requires less money than a traditional one.
Calculate the percentage of your initial cost
The good thing about calculating a percentage of your startup costs is that it allows you to better focus your business idea before writing the final business plan.
You define your expenses
These start-up costs refer to the money you pay to run the business. They are divided into several parts:
- Initial costs (you only pay once): registration, incorporation, marquee, legal fees, etc.
- Fixed costs: costs for services, inventory, insurance, web domain, etc.
- Variable expenses: dependent on sales. If these increase, the variable expenses increase.
- Deductibles: travel, stationery, marketing, etc.
Define your wealth
Known as Capital Expenses. They relate to the one-time payment of inventories, land, vehicles, machinery, equipment or advance payments of deposits.
Items to consider to calculate your initial cost percentage
Before starting your new business, you need to determine the following:
- Cost of future sales: raw materials, production, machinery, transportation, packaging, storage, and everything your product or service requires.
- Fees: Legal due diligence, copyright, trademark, non-disclosure agreements, attorneys, accountants, etc.
- Technology costs: hardware, software, internet, phones, servers, etc.
- Marketing costs: stationery printing, marketing, public relations, sponsoring, meetings, presentations, etc.
- Salaries and benefits: salary of your partners, employees, taxes, compensation, etc.
- Administrative costs: packaging, licenses, shipping, transport, printers, copiers, equipment, chairs, tables, etc.
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Calculate the initial cost of your project today
To calculate the entry fee percentage, open a spreadsheet document. Make 2 lists: expenses and assets. Includes EVERYTHING you invest from business cards, financial advice, remodeling, etc.
Now you need to allocate the costs. To do this, you need to be very knowledgeable about the prices on the market and adjust the options to your budget. When you find in a draft that the money you need exceeds the money you have, you can think of other ways to start your business.
Ask yourself the following questions:
- Can I run my business from home?
- Can I outsource employees?
After you’ve found the cheapest ways to start a business, you need to budget for operational expenses (the ones that make your product a success).
Let’s say you have a company Financiamiento Fácil SL that manufactures a product. To calculate this company’s percentage, you need to consider the following in your spreadsheet:
- Raw Materials: (variable cost).
- Office supplies: (fixed costs).
- Marketing: (variable costs).
- Depreciation: (fixed costs).
- Leasing: (fixed costs).
- Labour: (variable costs).
- Indirect labor: (fixed costs).
- Auxiliary materials: (variable costs).
- Repairs / Maintenance: (variable costs).
Remember that if you’re offering a service, you can leave the inventory on your list of acquisition costs.
To give you extra help, you can calculate the percentage of your deal online using Kreditrechnerymas.com
Many experts estimate that you calculate the turnover of your company in 3 months, others in 6 and still others in 1 year. In particular, this is difficult to predict until your product hits the market.
The idea here is to have enough cushion for your business to achieve profitability, although you can enlist the help of a financial advisor or a venture investor to do so.
Until the end…
If you need help integrating technology into the key activities of your new business, contact us!
Remember that in order to calculate your business percentage, you need to be as realistic as possible with the prices of your expenses. Then you can change your business plan. This is the basis for creating a financial plan that will allow your business to be “investable”.
If you want to know more about the money of your new business, I invite you to read more about this topic: