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ical items. Suppliers are often reluctant to ship their products to new businesses. This is one reason
why you should get to know your banker and request credit references acceptable to most firms. You
may have to pay your suppliers C.O.D. during the early phase of startup, so take this fact into account
when preparing your financial planning and startup costs.
Bookkeeping and Accounting.
Organize your accounting and record-keeping system and learn about the taxes the new company is
responsible for paying. Company documents generally are required to be kept for 3 years, including
a list of all owners and addresses, copies of all formation documents, financial statements, annual re-
ports, and amendments or changes to the company. All tax and corporate Filings should be kept for
at least three years.
There is probably no reason why you cannot do your own record keeping, at least in getting
started. If your bookkeeping capabilities are limited, use a part-time accountant to set up the com-
pany’s books on the basis of the above simple method. The accountant can keep the books for the
first few months while you learn the general procedure. Let your accountant be your advisor. After a
short time you will probably feel comfortable doing all the accounting without outside help.
Miscellaneous Issues to Consider.
In the construction industry, equipment and machinery are often essential to your business. Without
the proper equipment, it would be difficult to get jobs done efficiently and on time. The goal is typically
to complete a project in accordance with plans and specifications, on time, within budget, and at the
lowest possible cost. When starting a construction business, it is crucial to have the appropriate equip-
ment to execute the types of construction projects anticipated. As in all businesses, it is important that
the equipment pay for itself to earn a significant profit. In other words, the cost to own and operate the
equipment should be less than what the contractor charges for its use.
You will also want to consider both business and personal living expenses when determining how
much cash you will need. If you are leaving a salaried job to start your business, you should include
in your expense projection an estimate of your and your family’s living costs for the months it will take
to build your business. Talk to family members about the minimum amount of money your household
will need each month to function.
Once you add up startup costs to your six-month tally of recurring costs, the total may amaze you
and spur you to reconsider or to look for ways to economize. It probably makes sense to review cer-
tain categories, such as equipment, office supplies, or advertising/promotions, with cost control in
mind.
You’ve estimated your startup costs to the best of your ability, but chances are that you’ve never
owned or operated a business before. It would probably be wise to discuss with an established or ex-
perienced business owner whether you’ve made the correct assumptions in projecting your costs.
The U.S. Department of Commerce Minority Business Development Agency (www.mbda.gov)
has articles that discuss how much money will be needed to start a business, including helpful check-
lists and referrals to other resources of information. The U.S. Small Business Administration
(www.sba.gov) was created specifically to assist and counsel small businesses.