Non-recurring costs associated with setting up a business, such as accountant’s fees, legal fees, registration charges, as well as advertising, promotional activities, and employee training. Also called startup expenses, preliminary expenses, or pre-opening expenses.
Let me clarify that this discussion pertains to small and medium size enterprise startup costs and not about capital budgeting. Any project that an entrepreneur wishes to undertake has four factors to be considered.
Men
Material
Machine
Money
Finance is the lifeblood of any business and to be successful, one must, inject sufficient capital into it. Many businesses fail because of under-capitalization.
Seed Money Requirements
To determine how much seed money you need to start, you must estimate the costs of doing business at least for the first year. Expenses may be categorized as ‘one-time costs’ such as the fee for incorporating your business or the price of a sign for your building. Some will be ‘ongoing costs’, such as the cost of utilities, inventory, insurance, etc.
There is a pressing need for you to bring enough working capital to run the day-to-day business affairs. Without a projected fund flow statement and proposal, no bank or financial institution shall offer you long term loans to run the business. First of all, you need to write the business plan and ask yourself the following questions.
Ask yourself these 20 questions to make sure you’re thinking about the right key business decisions:
Miscellaneous fixed assets which comprise vehicles, furniture and fixtures, office equipment, workshop and laboratory equipment, distribution of power and water supply etc.
Expenditure on infrastructure facilities like water supply, power connection, roads, transportation etc., has to be particularly considered if the units are located in economically backward areas.
