Small business answers — NOW!

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. 
Brain Trust contributor: Author of Hurdle: The Book on Business Planning President, Palo Alto Software
© 2007, Small Business Network, Inc., All Rights Reserved.
Subject to the Terms of Use of
Print this page   Bookmark this page   E-mail this page to a friend   Go back to previous page
AskJim ID: 203