9/11/2006
Cash Flow for First 90 Days
by Herb Lawrence, Center Director, ASU SBDC
Not having enough working capital to meet operating expenses in the first critical months is a common mistake by start-up business owners. Although break even varies by business as a rule plan for at least 90 days of working capital. Without this cash cushion you may be out of business before you even begin.
Develop a monthly operating budget and be sure to include at least 3 months for:
• Rent/utilities
• Advertising
• Credit card fees – Charges vary between 3 and 5 percent of your total charges.
• Loan Expense – Plan for debt service if a commercial loan was needed to start the business.
• Office Expense and supplies – These add up quickly since they must constantly be replaced.
• Payroll – In addition to wages include payroll taxes, social security, Medicare taxes and unemployment taxes.
• Other Expenses – These can include insurance, bank charges, repairs & maintenance as well as health insurance.
For more information on developing a start up budget and cash flow plan, visit the Arkansas Small Business Development Center website at asbdc.ualr.edu to learn about workshops in your area.
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