Question

What types of variable and fixed costs would you expect to incur if you were developing a start-up company? Why do you believe this is a complete list of the applicable costs?

Answer 1

• Before starting of any business, we have to properly estimate all the possible cost that may incurred at different stages of developement.
• There is no specific method of calculating estimated cost of start-up of different kind of businesses because some business needs small Investment while other may required huge investment in inventory, Plant & Equipment etc.
• Therefore, It is important to identify all the possible cost that your business required for starting up. All thé expenses may be divided in broadly two category like one time expenses or fixed expenses and ongoing or variable expenses.
• While deciding these expenses, we also have to considered that whether expenses are essential or optional.
• Finally, for success of any start-up, we have to prepare a realistic budget in which all essential cost to run business in particular sector is mentioned. There is no specific list of expenses for starting of business, so we have to prepare a worksheet of all possible expenses prior to start à business.