Starting a new business or franchise can be very exciting. However, before you take the leap, it’s important to understand and calculate the costs involved.
Not only are there are a variety of expenditures and fees for the launch of a startup, there are also ongoing expenses to consider in order to keep your doors open long-term.
According to the Kaufmann Foundation (known for its entrepreneurial research and education), it costs on average $30,000 to open a new startup business. Home-based businesses can cost on the lower end, but many other types of businesses cost a great bit more. Every business is different, but most require similar costs that need to be figured into the startup cost of the business or franchise that you are considering.
Many entrepreneurs underestimate startup costs. In fact, undercapitalization (or insufficient funding) is the top reason why businesses fail, according to the Small Business Administration (SBA).
In order to avoid undercapitalization, here is a list of things to consider as you plan your startup business:
Understanding all of these startup costs is a huge first step in getting started as an entrepreneur. To help you adequately prepare, we’ve created a business planning calculator for estimating startup costs. Use it to better help you figure out the right amount of financing needed, as well as to plan for the business of your dreams.
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