{"id":18319,"date":"2024-04-05T09:00:00","date_gmt":"2024-04-05T01:00:00","guid":{"rendered":"https:\/\/blog.ninjavan.co\/en-ph\/?p=18319"},"modified":"2024-03-15T15:18:28","modified_gmt":"2024-03-15T07:18:28","slug":"calculating-business-startup-costs","status":"publish","type":"post","link":"https:\/\/blog.ninjavan.co\/en-ph\/calculating-business-startup-costs\/","title":{"rendered":"A Guide to Calculating Business Startup Costs"},"content":{"rendered":"\n

Maraming kailangan i-ready kapag magtatayo ka ng sariling mong business<\/em>, especially when we\u2019re talking about money. By working out your business startup costs, pre-launch and post-launch, you\u2019ll know just how much money you need to open and run a business before it becomes profitable. <\/p>\n\n\n\n

The financial information will be useful when it\u2019s time to look for financing options, whether you opt  to apply for loans, attract investors, or cough up your own cash. <\/p>\n\n\n\n

Also read: <\/strong>Ways to Finance Your Small Business in PH<\/a><\/em><\/p>\n\n\n\n

What are business startup costs?<\/strong><\/h2>\n\n\n\n

Startup costs are your total expenses before you begin to earn an income<\/strong> from the business. It covers the costs from your startup\u2019s pre-launch stage up to its operational stage. There are no thresholds on how much is too little or too much because the amount will depend on the nature of the business.<\/p>\n\n\n\n

Not only does determining your startup costs give you a view of how much you need<\/strong>, but it\u2019s also the basis for your profit estimates and informs your business plan in the next few years. A projection of how much you\u2019re likely to spend in the next few years can provide you and potential investors with a preview of how fast you want your business to grow.\u00a0<\/p>\n\n\n

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Start by calculating how much you need to start your business.<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n

Types of startup costs<\/strong><\/h2>\n\n\n\n

Ano ba mga gastusin mo<\/em> for your business?<\/em> Office rent? Your workers\u2019 salaries? Supplies and technology? Shipping fees? Identify first the costs of starting a business, then determine what type of cost each one falls into. Tracking your expenses in such a way will help in the long run when it\u2019s time to create your budget plan<\/a> or calculate your taxes.<\/p>\n\n\n\n

Let\u2019s classify the costs:<\/p>\n\n\n\n

1. Startup expenses<\/h3>\n\n\n\n

This refers to the costs you need before you launch your business. Startup expenses include fees to acquire your business permit and license, insurance, office supplies, and marketing fees for website creation.<\/p>\n\n\n\n

2. Startup assets<\/h3>\n\n\n\n

After identifying your expenses, figure out what you need to launch it. Startup assets refer to the costs of items that your business will use to operate, such as a computer, airway bill printer, camera for marketing, or any equipment that will produce your products.<\/p>\n\n\n\n

3. Operating expenses<\/h3>\n\n\n\n

Identify the recurring costs that will keep your business running. Some examples are office rent, Wi-Fi, workers\u2019 salaries, travel costs, advertising costs, and shipping fees. <\/p>\n\n\n\n

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How to calculate business startup costs<\/strong><\/h2>\n\n\n\n

In calculating your  costs for starting a business, think about your operating expenses. Unlike startup expenses and startup assets, which often consist of one-time payments, your operating expenses are ongoing. <\/p>\n\n\n\n

It\u2019s best practice to factor in your total operating expenses for a year (at least). Simply multiply your monthly operating expenses by 12. <\/strong><\/p>\n\n\n\n

You may also want to include additional funds to expand your operations. Maybe you eventually need a bigger business space or hire more employees. A plan to eventually expand could help potential investors see that you have a sound strategy to ensure your startup will thrive.<\/p>\n\n\n\n

Now, add up your startup expenses, assets, and a year\u2019s worth of operating expenses to come up with startup costs.<\/p>\n\n\n

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Add up your startup expenses, assets, and initial operating expenses to calculate your startup costs.<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n

How to manage your startup costs<\/strong><\/h2>\n\n\n\n

You need to manage your startup costs well to avoid a financial disaster. <\/p>\n\n\n\n

Here\u2019s what you can do:<\/p>\n\n\n\n

1. Always track your expenses<\/h3>\n\n\n\n

It doesn\u2019t matter if that pen only costs P7. List it. Making this a habit can give you a clear picture of where your money is going and can make you think about where you want to invest to improve efficiency.<\/p>\n\n\n\n

2. Avoid unnecessary expenses<\/h3>\n\n\n\n

Is it time to move to a bigger office space? Is the demand for your product big enough for you to get extra equipment? Do you really need the latest technology? Don\u2019t waste money on things your business may not need.<\/p>\n\n\n\n

3. Choose a business model you can afford<\/h3>\n\n\n\n

Many entrepreneurs start online since it\u2019s much cheaper than opening physical stores. But online may not work for your business idea. So consider your options well.<\/p>\n\n\n\n

4. Hire the right people<\/h3>\n\n\n\n

Figure out your staffing needs, and understand what kind of employee will bring value to your business.<\/p>\n\n\n\n

5. Minimize startup costs<\/h3>\n\n\n\n

A good business doesn\u2019t have to cost big when it launches. Some businesses can start on a low of P100k<\/a> even. But if your idea needs more than that, lower the costs with a few tactics:<\/p>\n\n\n\n