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Guidebook to Starting Your Own Engraving and Cutting Business

Guidebook to Starting Your Own Engraving and Cutting Business

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Financing <strong>and</strong> startup costsFinancing is imperative <strong>to</strong> all businesses. Since raisingcapital is an integral part of starting a business, the<strong>to</strong>pics below are crucial when starting your venture.$$$Startup CostsUnfortunately, there is no “magic formula” for estimating the start-upcosts of your business. This is because each business is different –each has its own monetary needs at different stages of development.Some can be started on a small budget, while others may necessitateconsiderable investments in inven<strong>to</strong>ry <strong>and</strong> equipment.The first step in determining your start up costs is identifying all theexpenses your business will experience during the start-up phase.Keep in mind that several of your expenses will be one-time costs.For example, the initial equipment purchase, or fee for incorporatingyour business are both one-time costs, whereas things like renting as<strong>to</strong>refront, monthly utilities <strong>and</strong> insurance are all ongoing expenses.As you are planning <strong>and</strong> identifying costs, we encourage you <strong>to</strong> decidewhether they are necessary or optional. Keep your budget realisticby only planning <strong>to</strong> purchase necessary elements for your start-up.Essential expenses can be separated in<strong>to</strong> two groups: fixed (overhead)<strong>and</strong> variable (related <strong>to</strong> business sales). Fixed expenses cover things likemonthly rent, utilities, <strong>and</strong> administrative <strong>and</strong> insurance costs. Variableexpenses include inven<strong>to</strong>ry, shipping <strong>and</strong> packaging costs, salescommissions, <strong>and</strong> other costs associated with the direct sale of yourproduct or service.Breakeven AnalysisA breakeven analysis will help you underst<strong>and</strong> when your business cancover all of its expenses <strong>and</strong> start <strong>to</strong> make a profit. You must thoroughlyunderst<strong>and</strong> your start-up costs before you can begin <strong>to</strong> determine yourbreakeven point.It’s crucial that new business owners underst<strong>and</strong> that $10,000 in saleswill not cover $10,000 in monthly overhead expenses. The cost of selling$10,000 in product may cost the business owner $2,000 at the wholesaleprice, which leaves a profit of $8,000. Simply put, you breakeven whenyour revenue is equal <strong>to</strong> all business costs.© 2008 Epilog Laser21

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