What are some critical factors to consider when preparing a start-up budget?
submitted by otsile

Schmitty

If you're making a budget, you've definitely got to conduct a comprehensive cash flow projection. Make sure you consider all initial capital expenditures, operational costs, and contingency reserves. Overspending is a real threat to a startup, and it's easy to underestimate what it will take to get moving. Those contingency reserves are an absolute must, because you don't know everything that's coming. It's always best to plan on surprises.

Accurate estimation of fixed and variable expenses, along with realistic revenue forecasts, is critical. Also, check your funding sources to make sure you'll have sufficient working capital to cover unforeseen expenses. You should work some wiggle room into your budget.

H Robert Smith

When making a start-up budget, you should think about all the costs you'll need right from the beginning, like equipment, rent, and supplies. It's also important to realistically estimate how much money you'll make once you're up and running. I mean, go ahead and make big goals, but try to be realistic about startup pains.

Don't forget to include some extra funds for surprises or unexpected expenses. Planning ahead like this helps make sure you don't run out of money before your business gets going. You may have a great idea, but if you run out of capital before you can deliver, you're done.

randy2004

- List all one-time start-up costs (equipment, registration, licenses, etc).
- Estimate continuing monthly expenses (rent, salaries, utilities).
- Plan for unexpected costs by setting aside a contingency fund.
- Forecast your expected income to see when you'll break even.

Assume it will take longer than expected to actually turn a profit. This will give you some extra cash for unexpected expenses or unexpected market conditions. Maybe it's a bad time of year to launch your type of business, so just be prepared for an uphill battle as you get going.