Home » Home & Style » Crafts » THE FINANCIAL SIDE - Part II

THE FINANCIAL SIDE - Part II

© Barbara Massie

Here we look at the elements necessary to the financial side of business. These will help with your planning for acquiring funding for a small business.

START-UP COSTS

First, you must estimate start-up costs. What will it cost to have the business up and running? Create a list of items needed to start. Use Start-Up Costs Worksheet as a guide for figuring the costs for your crafts business. Most will be one time expenditures. Some business people cut costs in the beginning by leasing or borrowing equipment. Ponder using second hand items when possible. When working at home with few customers coming to the door, everything in the workshop does not have to be without dents, scratch free new. Be creative to keep the start-up costs down.

Here are examples of start-up expenses; there will be others depending upon your type of business or service:

1. Licenses, permits.
2. Telephone deposit - an extra line, one separate from the family.
3. Office supplies - a continuing need, but initially a large purchase.
4. Equipment - this includes computer and software.
5. Furniture - such as table, chairs.
6. Remodeling - building bookcases counts here.
7. Services rendered - electrician, painter, computer setup.

Read Startup Expenses on the business know-how site.

OPERATING EXPENSES

Next, estimate how much working capital will be needed to operate the business for at least six months and more realistically, twelve months. Consider trading services to cut costs where possible. Monthly Business Expenses Monthly Business Expenses can help you determine if you can affored to start a craft business now. For instance, a new business person needs business cards and other printed materials, work out a trade with the printer. Trading resources depends on the type of business or service you provide, but look at the possibilities.

List all operating expenses; most will be monthly expenditures:

1. Telephone expenses.
2. Electric expenses, even if operating in home.
3. Office supplies.
4. Other supplies and materials.
5. Advertising costs.
6. Insurance fees.
7. Business membership fees.
8. Legal and accounting fees.

COSTS OF LIVING

When you are the main breadwinner in the family, costs of living must also be taken into consideration. Some consider that as a home-based business there will be no overhead, this is not true. A home-based business is absorbing and creating more expense than is normally paid in the course of just living in a home. Whether your income is the main source of family income or not, calculate which and how much of living costs the business will be impacting.

The copyright of the article THE FINANCIAL SIDE - Part II in Crafts is owned by Cheryl Lewis. Permission to republish THE FINANCIAL SIDE - Part II in print or online must be granted by the author in writing.