Accurately Estimating Start Up Costs

[sim37]

Good evening everybody. I am new to the forum and a complete newbie to starting up a business. I have come to the point in my life that I do not want to have a 9-5 anymore and would like to start my own business. My problem comes with my own inexperience in researching, so I thought I would throw out a few questions for those of you in "the know."

Firstly, when starting a business, how do you estimate start up expenditures as accurately as possible? Do you know of any resources or templates to follow that will help me through the start up process?

What is the most accurate way to estimate projected revenue?

What can I do to become more knowledgeable for little personal cost as the only assets I own are a couch and a tv?

Starting from nothing is keeping me frustrated at this point and I would like some tips on where to go from here.

Your help is greatly appreciated.

-David

[barbaragabogrecan]

Nice post. One of the toughest things in starting a business is, well, figuring out what it's going to cost you to start. It's tough because startup costs are a moving target, easy to underestimate and almost always subject to change. Fixed costs are one-off costs, or costs that occur periodically but do not vary with business activity. Other expenditures are variable. Variable costs change with the level of activity in the business. Thanks for sharing.

[JKansas]

At this point you have not told us what type of business you would like to start. Once we know that you can look at things like location, inventory, office setup, renovations things like that. The basic planning process is done by researching every aspect of your chosen business and then pricing out what your research has told you.

One of the most cost-effective things to do is to research and look up things on the internet. There is a wealth of free information out there. There seems to be a lot of info on this site about online ventures. There are also local ways to make money like craigslist or ebay.

Knowledge is money. What do you know that others don't? Learn everything you can about a passion and see what you can make from it.

[sim37]

Well first I will give you little background into my location. I live in southern Utah which is a very retirement oriented community. At the same time we are growing exponentially each year with our college community. There is no place for people from about 18-35 to hang out around here. I would like to open up a live music venue/bar in the area. With only two bars in the area, one of which only carries a beer and wine license and only has live music once a week, I believe a combination of the two would provide a fun, profitable place for my target market.

However, I have never undertaken a venture like this before as I have been in the military and worked 9-5 jobs after I have been out ever since. I feel that it is time to get out and really try something for myself. I know that opening a bar is a high risk business and with no starting capital or anybody in the know around me I may be barking up the wrong tree but something tells me this is a good idea.

I appreciate your help.

[JKansas]

First step: get a job at a bar! Your military experience might help with that, but the best experience is to work at one. Bounce, bartend, be a doorman, do it all. The little things you learn and pick up on are well worth the sometimes crap wages! Running a nice bar is an organized and well planned process.

If I were you I'd so some free things first. Scout out some real estate, find some locations and develop your idea. I've seen live music venues with less than 100 capacity and those with over 1000. Which way do you want to lean? Lookign at avaiable real estate and prices can help that decision. Also, check out local laws, you'll find the costs of permits and licenses and also what's required. Also look up fire marshal codes so you dont overbuy a location. I think locally ours was 768 people for bars. So even if you had an infinite amount of space that bar was only allowed 768 people.

Research sound systems. This can make or break a club. Any special effects you have experience in? (lighting, nitrogen sprayers, etc...) Feel out people about themes. Find local talent interested in playing. It's hard to keep good talent playing consitently. Find local alcohol distributors or how bars buy liqor in your state. You may have to have a bartender's license, food handlers card, etc... do you have those personally? If not check into it, they're usually cheap and it's good for the owner to know what his staff should be doing.

Really delve into the requirments for starting and running a bar. A well run bar requires service, security, and entertainment. Of course, the reuqirements for each changes based on the theme of your bar and the size. These are also just the service you provide, not even the actual business duties.

Lastly, you're a veteran so check out the sba. There are programs to help veterans start businesses. If you're a veteran and a minority you're set! Serisouly though, there are programs out there that could really help you with capital and resources. Also, the SCORE program through the SBA is a great help, especially with the actual business side. I wouldn't jump into anything, keep your day job. Since you're a vet i'm sure you know how to rough it a bit, i'd do it. Bars are run at night, you hire employees, there is no reason you can't keep your day job while getting it started. Then 6 months or a year down the line when it takes off, you can quit. And if it doesn't take off then you have a job still while you plan your next venture!

Jared

[sim37]

Thank you for the detailed response Jared. I will look in to what you've mentioned, except working at bar, as I have found there are none hiring anywhere in my area. Everything else should be easy enough to accomplish.

[JKansas]

No problem.

That's understandable. When I got my job at one it was a right place, right time kind of deal. It's definitely doable, you'll figure it out. Just consider how things should go, could go, and worst case scenario. Then tailor your model as the doors open and you experience it. You learn little tricks to controlling shrinkage of alcohol, fights and arguments, dealing with employees, patrons, authorties etc.

Next time you're out of town, go out to the bars a little early. Ask the bartender if a manager or owner is available. If they are, tell them you're from out of town, you're impressed with their bar and you're planning to open your own, ask if they'd mind showing you around a little bit. You might get a few negative responses, but i'd guess that many owners would be more than happy to show you what they've built since you're not competition. Ask questions, be respectful, let the owner show off for you. If it all works out, thank them for their time and see if you can get an email. You'll gain contacts, confidence, and some free knowledge.

Hopefully this helps, and again, good luck.

Jared