Question

Asked: Nov 25, 2009

In this economy is only 6 months pre-paid rent on a lease for a startup in prime commercial area sufficient?

Im starting a business... a specialty gift shop and have covered operating costs for less than a year and am wondering what expenses should be covered and for how long in this economy. Any suggestions?

Categories: In Startup > Startup - Other
In Real Estate > Leasing
In Startup > Startup Financing
Industries: In Retail > Retail - Other

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Answers

Hi Infinite,

There is no hard and fast 'formula'. The question you need to answer is:

Do I have enough money to last until I start turning breakeven? Do I have enough to last until I turn a profit?

I'd suggest your facility and operating expenses are first priority. Lights, heat, merchant svcs, insurance, etc.

Advertising is also a key factor. Many start-ups make a big splash, and then 'pull in thier horns'. Try to keep it consistent. People see ads disappear, they think the business has disappeared.

Inventory replacement should be covered by sales, just watch your re-stocking cycles. Try not to overspend/overstock. It's sometimes better to be 'out' for a day or two than to have too much on hand.

Hope this helps

Source: http://www.abusinessmentor.com

Answered: Nov 25, 2009

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