Start-up Cash

Q. I have been a supervisor for a large painting contractor. I want to start my own painting contractor business. I am going to have to obtain a loan. How should I proceed?

A. Your first step is to determine how much money you will need. Your initial forecast should reflect the amount of cash you will need until your income begins offsetting your cash outflows. This is referred to as the break-even point.

To begin, you need to identify those expenses that will only occur once at the start of your business. Once you have figured out which start-up items you need, obtain reliable estimates as to their costs.

Next, you need to estimate your operating expenses not directly related to the sales volume. These are "fixed" expenses because they are ongoing regardless of the volume of your business.

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