Round Table
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Cost Plan
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Why have a Cost Plan?
Imagine this! You decide to extend your house with two additional
rooms on the ground floor. Next day you telephone a small construction
company and they start work immediately. Each week you pay them for the
work done that week. A few weeks later there is no money left and no
roof on the building, no plaster on the walls, no electricity or
heating. You are left with a big hole in your wallet and a partially
completed building that is uninhabitable. Definitely not good news.
Go
back in time and return to the point where you decided to extend the
house. The obvious questions you would be asking yourself are "what do I
actually want?", "how much will it cost?" and "how
do I fund it?". You would employ the services
of an architect for blueprints then consult with various construction
people to estimate costs. Once you have a view of want you want and the
cost to achieve it you can decide if two additional rooms are practical.
If answer is yes then how do you fund it? Cash from savings, a loan or a
combination of these. A cost plan is a vital element of the small business
plan.
Build the Plan
Apply this logic to starting a internet home based business. You have your business idea and have considered which
tools and services are required. So, what will all this
cost? Not just to set it up but to operate for the first year or two.
Let's
take a look at set up cost and establish the starting capital
requirement. Assume that you already own a PC equipped with a modem and
that any affiliate programs you sign up with are free. Tangible goods
manufacture and retail costs are excluded because of the variability in
the nature of these activities. Let's just concentrate on internet
element of the business. Here are the main items to consider:
|
Set Up and Year 1 |
| Description |
Cost |
Frequency of Payment |
| Spreadsheet software |
|
One time |
| Word processor software |
|
One time |
| Web authoring software |
|
One time |
| Internet service provider |
|
Monthly |
| Telephone calls |
|
Quarterly |
| Domain name registration |
|
Bi-annual or annual |
| Web design & build |
|
One time |
| Web maintenance &
development |
|
Monthly |
| Web hosting |
|
Monthly |
| Starting capital repayment |
See below |
Monthly |
| E-products for resale |
|
One time |
| Starting capital repayment |
|
|
|
Total |
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