|Every business is different and has its own specific cash
needs at different stages of development; therefore there is no generic method for
estimating your startup costs. Some coffee shops can be started on a shoestring budget,
while others may require considerable investment in inventory or equipment. It is vital
to know whether you will have enough money to launch your coffee shop venture.
To determine your startup costs, you must identify all the expenses your business will
incur during its startup phase. Some of these expenses will be one-time costs, such as the
fee for incorporating your business and the price of a sign for your building. Some expenses
will be ongoing, such as the cost of utilities, inventory, insurance, etc.
While identifying these costs, decide whether they are essential or optional. A realistic
startup budget should only include those elements that are necessary to start the coffee shop.
These essential expenses can then be divided into two separate categories: fixed (overhead)
expenses and variable (related to business sales) expenses. Fixed expenses will include
figures like the monthly rent, utilities, and administrative and insurance costs. Variable
expenses will include inventory, shipping and packaging costs, sales commissions, and other
costs associated with the direct sale of a product or service.
The most effective way to calculate your startup costs is to use a worksheet that lists the
various categories of costs (both one-time and ongoing) that you will need to estimate prior to
starting your business.