Estimating Operating Costs of Your Business

Estimating Operating Costs of Your Business

No matter the size of your business, you should come up with an educated number for operating costs. There are common costs you are likely to have and some that are more unique to your business. You want to have the full financial picture, which will determine how much capital you need or if you will need investors or loans. Some are initial costs and some are ongoing – below are a few things to consider:

Rent and Facilities – The cost of renting or purchasing the space for your business.

Utilities– Water, electricity, heat and internet/phone. Even if you are a home-based business or operate as an e-commerce business, you will likely incur these costs.

Insurance – Property insurance, liability insurance, workers compensation, and more depending on the nature of your business.

Inventory – Cost of ordering or producing the goods you sell, and even the cost or storing your inventory.

Salaries – Both the employees of your business and contractors you hire.

Equipment and Supplies – Simple things like computers, software, pens and paper, printer ink, and supplies needed to perform daily tasks.

Licenses and Permits – Registering your business as a legal entity and additional licensees like zoning permits, sales tax permits, health permits and building permits.

Marketing and Promotion – A company website, business cards, signage, ads and even grand opening events. Many of advertising costs are going and are necessary to help maintain your customer base.

Attorney and Accountant – Incorporation fees, legal fees, and fees paid to accountant during tax filing or for bookkeeping.

Operating costs can fluctuate, so it is important to have a plan of action and compare costs over multiple periods.

Looking for more resources? Head to these financial sites here and here.