1.1 What are my costs?
When thinking about your start up costs, you need to consider everything you are going to need, from premises to equipment.
Activity 1 Estimating my costs
Planning a budget for your start up costs is an important exercise, and one that you may want to spend more time on later. For the purposes of this activity, start by making a list of what you’ll need to spend money on up front in the Item column of Table 1, e.g. equipment, research, raw materials, workshop space and so on. If you have time, you could put some broad costings in the Estimated cost column.
In times of unexpected change, it will be useful to know how you can reduce your costs if you need to. Look back at your totals, and think about whether you could reduce any of the costs you’ve summarised here. Are any of the things you’ve listed non-essential? Could you cut back on them later on if you needed to save money?
Once you have an idea of your overall set-up costs, you can work out whether it is something you can afford to cover yourself, or whether you need support from elsewhere.
Later on, you may need to focus on a project budget, e.g. if you are planning to run an event, or on budgeting for the day to day running of your business, but that is beyond the scope of this course.
You’ll revisit managing your finances in Week 8, when you look at cash flow forecasting.
Once you have an idea of how much you need in order to set up your business, you can start to consider sources of funding.
In the next section, you’ll explore the funding provided by public bodies in the creative arts sector and consider whether this is appropriate to your idea.