Optional Method to Calculate Needed Capital
Many businesses can get a reasonable picture of their financial future by using the following
formula. If the business will start making sales very soon after opening, you may decide to multiply
monthly fixed expenses by a number smaller than six.
Total Required Capital =
Six Months of Fixed Expenses + Asset Purchases + Start-up Expenses
Column 1 Column 2
Monthly Fixed Expenses
Salaries (include owner) __________
Payroll Taxes at 12% __________
Rent __________
Marketing and Advertising __________
Supplies __________
Telephone & Utilities __________
Insurance __________
Maintenance __________
Legal and Accounting __________
Miscellaneous __________
(Other)_________________ __________
Monthly Fixed Expense Sub-total _________ x 6 = _________
Asset Purchases
Purchase of Land and Building ___________
Decorating and Remodeling ___________
Fixtures and Equipment (plus installation) ___________
Deposits on Rental Property and Utilities ___________
Beginning Inventory ___________
Asset Purchase Sub-Total __________
Start-up Expense You Pay Once
Legal and Accounting Organization Costs ___________
Licenses and Permits ___________
Initial Advertising and Promotion ___________
(Other)______________________________ ___________
Start-up Expense Sub-total __________
Total Estimated Cash Needed to Start (Add Column 2) __________