Part 13 ~ Acey Gaspard’s Guide to Starting a Small Business – Made Simple
Correctly estimating a startup cost can lead to a successful startup, while an incorrect estimation could result in a financial disaster. You must invest the time and effort to come as close as possible to the actual startup costs for your business idea.
The Results of Inaccurate Startup Costs:
Estimating Too High
If your estimation is high, it could lead to a decision abandoning your business idea, and you could be losing out on the best opportunity of your life.
For example, if the estimate shows that getting a loan for the cost is unrealistic, and even if you did get the money, the business model can’t produce the profit and revenues to cover the expenses. You end up walking away, and it’s back to your day job.
Estimating Too low
If your estimate is low, there will be trouble ahead, and you could be three-quarters of the way and find that you have run out of cash with no means to borrow more. You had failed before you opened your door, and you have a pile of new debt while you’re back to your day job.