The start-up costs of a new business are defined as all expenses that are required to get the business operational. Some of these will be one-off payments, while others will be ongoing costs throughout the lifecycle of the business.
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DEFINING BUSINESS
START-UP COSTS
The start-up costs of a new business are defined as all expenses
that are required to get the business operational. Some of these
will be one-off payments, while others will be ongoing costs
throughout the lifecycle of the business. Some will need to be
paid before the business opens, while others will need to be paid
once the business is up and running.
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Pre-Opening Costs
Costs that may be required to be paid
before the business opens include bor-
rowing costs, the cost of formulating a
professional business plan, and tech-
nology and research expenses. There
may also be permit and licenses to ac-
quire, as well as insurance. Equipment
will usually require some form of pay-
ment pre-opening, even if the decision
is made to lease rather than buy out-
right. A certain amount of supplies and
materials will also be required before
the business can open.
Post-Opening Costs
Costs classed as start-up costs but that
are incurred only once the business has
opened include employee wages and
funding for marketing, advertising and
other forms of promotion. There may
also be ongoing costs such as equip-
ment leasing fees.