Establishment Costs

Work out how much money you need

The first task for a start-up business is to work out how much money you need to start the business, and whether you have sufficient savings or need to obtain finance. The type of start-up costs will differ depending on whether you:

  • start a new business;
  • buy an existing business; or
  • buy a franchise.

Just opening the doors to start operating your business will incur some expenses. For example, you may have to:

  • pay legal, accounting, and consulting fees;
  • pay for licences, permits, and connection of utilities;
  • arrange insurance;
  • arrange furniture, equipment, office supplies, and retail shop fit-out;
  • pay advertising, printing, and starting inventory; and
  • include an amount for working capital - cash to fund your business until you actually start to collect payments from customers.

Estimate your expenses accurately

It's important to estimate these expenses accurately so that you don't leave out important expenses. Opening a new business often costs more than you anticipate. Make an allowance of about 20% of the total establishment expenses to account for unforeseeable expenses (called contingencies).

Make a note of how you predicted your forecasts of expenses. Explain the amounts and terms of proposed loans, how much will be contributed by each owner, and what percent ownership each will have.

What's next...

Related Information


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