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Establishing Budget

In order to estimate necessary and suitable costs prior to start-up, you must work out an establishing budget.

How big the establishing costs get depends on what kind of company you want to start.

Small investment

If you want to start a consultancy firm working in human resource development you might only need a telephone, a computer and education/skills in human resources. You probably have the education/skills and if you start the business from home; the only expenses you need to start is a PC and a telephone. The start will then be rather inexpensive.

Large investment

On the other hand if you want to start a production making electronic devices your establishing budget will be high. Before you can start selling your electronic devices you need a production building, machinery, packing facilities, skilled staff, a stock of electric components, office equipment and...this may cost millions.

What expenses do you meet?

Below you find some of the most usual expenses when starting a business. In your business plan you delete the ones you do not encounter in your new company.

• Remember: The less expenses the better. All expenses have to be paid from the profit in your new business.

Expenses in an establishing budget

Premises

• Rent
• Deposit for purchase of premises or business
• Deposit (e.g. 3 months rent)
• Goodwill - payment to the former owner for his work at the premises
• Furnishing and renovation

Production equipment

• Machinery
• Tools
• Other things

Shop fittings

• Cash register
• Counter
• Other things

Office fittings

• Furniture (desk, swivel chair, shelves etc.)
• Computer (printer, network)
• Telephone
• Fax machine
• Copying machine
• Other things:

Purchase before start

• Raw materials/semi manufactured
• Manufactured goods (stock)
• Stationery
• Other things:

Car

• Deposit
• Other acquisition costs

Counsellors

• Lawyer
• Accountant
• Other

Marketing

• Writing paper, business cards
• Brochures
• Advertisement
• Website
• Opening reception
• Other things

Other expenses

• Application for a patent/registration
• Other things

Registering establishing costs

All the costs you get in the establishing budget will at a later stage be transferred to your operating budget. Bigger investments will be transferred to the company´s balance sheet.

The establishing budget is a snapshot of the cost you get before you can start operating your company.

- Download a Establishing Budget from Shop & Downloadcenter
- Go to Operating Budget - an Explanation
- Calculate your needed turnover and sales - easy online tool

He knows not his own strength that hath not met adversity.
- Ben Jonson, born 1573