Estimating business expenses
How can I estimate expenses for my new small business, when there aren't any obvious comparisons available?
First, somewhere, there is a business that's similar to yours, even if not exactly like yours. Determine what that is, find out as much as you can about that business' expenses, and make the necessary adjustments for the differences.
For example, you can estimate rent by figuring out how much space you need and finding out how much other facilities in your area are paying for similar space. Use this same method of looking at a similar business to calculate hourly salaries, advertising costs, etc. until you have built a financial model of the business.
Business planning software and spreadsheets are useful tools when building these models. Financial models are not only very useful for business planning but they also help in profit improvement, product costing and many other business decisions.
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Related Categories: Accounting, Finance, Taxes, Business Planning, Business Start Up, Cash Managment, Management
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