Finding Financial Information

Preparing the Financial Statements

Cost Drivers
Pricing
Gross Profit Margin
Sales and Marketing
Operational Expenses

Step 5: Calculate Management, Operations, Facilities, and Tax Costs

As with sales and marketing, management and operations costs are highly dependent on the particular circumstances surrounding your company. Operations and Facilities costs, such as equipment, office space, and furniture, are usually readily obtainable from an equipment supplier or real estate agency in the area where you will locate your company.

Because of the idiosyncrasies of tax information, the best approach is usually to ask a similar business in the geographic area you are also interested in, or contact a local tax office or accountant. Be aware, though, that taxes are not to be overlooked, as they can often take a significant chunk out of cash flow. It is not uncommon for a business to incur taxes between 35 and 50 percent after all federal, state, and local taxes have been accounted for.

Management and employee costs, though, depend heavily on what you as the orchestrator of this opportunity, envision as the personnel necessary for the company’s success. You will also need to support these personnel needs and their cost in your set of assumptions; hence, salaries and wages should be based on credible industry averages or primary data. If you expect to include other forms of compensatory benefits such as stock options or other perks, note their use and cost to the company in your assumptions, and in the income and cash flow statements if their cost is significant.

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