Our case study of a ficticious sandwich shop outlines many of the expenses you are likely to incur during your first three months of operation.
Suppose you have a sub sandwich shop located in Cedar Rapids, Iowa. Here's a look at the cash you'll need in the first 90 days of operation. For a look at the cash you'll need to get the shop off the ground, using the same example, see our case study on startup costs.
| Working Capital Dollars Needed | ||
| Advertising | $600 | Budgeted newspaper and shopper ads at $200 a month |
| Bank service fees | $100 | Not a significant fee in this type of business |
| Credit card fees | $0 | Credit cards won't be accepted, at least initially |
| Delivery charges | $0 | Amount included in inventory costs |
| Dues and subscriptions | $50 | Trade magazines for analyzing restaurant trends |
| Health insurance | $0 | Employ retirees and high school kids who do not need insurance |
| Insurance | $1,450 | All business insurance including worker's compensation |
| Interest | $1,500 | Loan for $60,000 at 10 percent interest for 90 days |
| Inventory | $1,000 | This is an expansion of food inventory |
| Lease payments | $900 | Oven leased at $300 per month |
| Loan payments | $0 | Interest only due the first 90 days |
| Miscellaneous | $1,000 | Amount for contingencies |
| Office expense | $100 | Minimal office expense |
| Payroll-employees | $20,748 | Computed as above |
| Payroll taxes | $1,420 | Is 10 percent of payroll |
| Professional fees | $50 | Using your basic bookkeeping |
| Rent | $3,000 | Building at $1,000 per month per bid |
| Repairs and maintenance | $200 | Expect minimal based on new equipment and leasing |
| Salary of owner | $0 | Owner has saved enough cash and wife works |
| Sales tax | $0 | Cash sales, sales tax is paid by customer |
| Supplies | $100 | Internet fees and various charges |
| Telephone | $300 | Business rate of $100 per month |
| Utilities | $1,200 | All utilities estimates for 90 days |
| Total | $33,718 | Working capital needed for the first 90 days |
The total amount of working capital needed for this sub shop is $33,718. This is an estimate of the amount that this new business will need from the first day the business is open through day 90. Refer to cash needed to get to opening day to compute the amount of cash needed to start the business. See getting a loan for the steps necessary to obtain financing for your new business.
If you're interested in estimating your costs beyond the 90 days, see our discussion of managing your cash flow.