How Much Do You Need for a New Business? Accurately Determining Business Plan Expenses
Michael Sheridan, COO of Docstoc (http://www.docstoc.com/) talks about business plan expenses. Watch this to determine how much you really need to start a business, and where to find the best resources for this information.
- Search Google for "(your industry) market size"
- Study the resources page of any industry associations
- Visit & read the websites & PR announcements of your competitors
One of the most common questions I get from entrepreneurs is what are the expenses my business is going to have? Or how should I think about what the expense line items are going to be in this financial model and I really have three simple answers for that.
It’s one, talk to other entrepreneurs and business owners. Whether they’re in your industry or not, I’m sure they have a great idea of the expenses about how you run your business.
The second way that you do it is really based off of looking for how much employees cost because that’s one of the biggest expenses any business has so go look for job descriptions and salary ranges from other companies that are similar to the people that you might be hiring or need in your business to make it successful and you just take those expenses and salaries and you can plug them right into your financial model.
The last thing you need to do is call vendors and get pricing from specific companies whose service you will use. Whether that’s phone, whether that’s rental places, whatever the case may be, call them up, get an accurate expense and again, you can place that right into your financial model.
So when you’re looking at determining expense line items, and how much things actual cost, take the time to get out there, talk to real entrepreneurs and get accurate expenses to drive your business plan and financial model.