When you are ready to get started, the next most important thing you need to do is plan your budget. There are two separate budgets that you need to do, a startup and operating expenses.
A startup budget consists of everything you need to get you started. The best way not to forget anything is to make a list of all the items you need to include. These might be professional fees, legal, purchase of business, incorporation, zoning, business name search, and a partnership agreement for example. There also might be accounting fees which could include setting up books. There is cost of insurance, health, disability, liability, and property. You will need materials, equipment, and supplies. If you decide to sell than you will need inventory. You need to have an office space. Will you need to do any redecoration, or remodeling? Then finally, there is marketing costs which can include advertising, your brochure, and your web page design.
You also need to consider how you are going to pay bills while you get your business started. If you have a sizable nest egg, you may choose to use that until you get your business running. You may have a significant other who can support the expenses. If you do have either one of these options you do not need to figure your living expenses into the cost of startup. However, if you need to pay for your living expenses, even if it is just a little bit, then you need to include that. You should include expenses for at least 6 months.
Another alternative to that concern is to work at your business part time until you make enough money. But consider the stress on yourself and your family before you make the decision. Also consider if you will be able to pay your bills if you leave? What happens if the business fails? Can you live with less income?
The next budget to consider is your monthly operating expenses. The good news is that some of the expenses in your startup budget will not exist or will be considerably less in this budget. The bad news is that there will be other expenses to consider. These items could include any loans that you took out, payment of taxes, dues and subscriptions, repairs and maintenance, and payroll. Add up these expenses, plus equipment, inventory, supplies, professional fees, insurance, licenses and permits, utilities, advertising, miscellaneous, and personal living expenses. Now you have an idea of what your monthly expenses will be.
Information from The Idiot’s Guide to Home Based Businesses