1. 4.00 Explain the fundamentals of financing a small business.
C. Financing a Small Business
4.00 Explain the fundamentals of financing a small business.
4.01 Identify the start-up costs associated with owning and operating a small business.

2. Start-up costs associated with opening a small business
Start-up costs: Expenses that are initially paid to establish a business.

3. Types of start-up costs
Rent or lease space
Equipment, furniture, and fixtures
Decorating and remodeling
Beginning inventory
Deposits for utilities
Accountant and lawyer fees
Licenses and permits
Advertising and promotion for grand opening
Contingency funds

4. Factors that affect start-up costs
Nature of the business
Manufacturing
Retail
Wholesale
Service

5. Factors that affect start-up costs
Size of the business

6. Factors that affect start-up costs
Inventory required
Customer credit policies
Other unique factors

7. Factors that affect start-up costs
The estimated time between starting the business and earning income from sales.
The operating expenses that must be paid before cash is received from sales.

8. Expenses that remain the same for a period of time.
Fixed costs
Expenses that remain the same for a period of time.
Office salaries
Insurance
Rent or lease

9. Expenses that may change from month to month; these expenses are often based on quantity of good or service sold.
VARIABLE COSTS

10. VARIABLE COSTS Salaries and wages for employees
Advertising and promotion
Supplies and materials
Utilities
VARIABLE COSTS