One of the most common mistakes businesses make is being undercapitalised – not having enough money to get started, with some left over for contingencies.
It is essential to develop a start up cost schedule to make sure you have included all costs and have enough money to get your project off the ground.
This should include things like:
Concept development costs – business plan, menu development etc. ($2000)
Plans – Required by both the Local Council and landlord (Allow 4 weeks, $5000)
Council Applications – Food Business License (takes approximately 30 days to process, $2000)
Leasing costs – legal fees ($2000)
Rental bond (usually a bank guarantee of the equivalent of 6 months’ rent)
Shop fit out
Insurance – public liability, business insurance, workers compensation
Branding and graphic design – logo, menu, business cards, flyers etc.
Website design and construction
Marketing and Social Media
It is crucial to have enough money left over to cover the day-to-day expenses until the business becomes profitable. A new business would need the equivalent of 4 months’ rent and wages.
If you are purchasing an existing business you will need to set aside money for unexpected costs and expenses for things like equipment breakdown, building works etc.
If money is tight, leasing equipment can be a great way to free up working capital. Rather than spending $15,000 on a new coffee machine, lease it. The lease repayments are tax deductible, and with most commercial leasing plans you own the equipment at the end of the lease period (usually 5 years).
You will then have money to spend on other things, like your website and Facebook advertising to attract new customers.