If you’re transitioning from a day job with a regular paycheck to running your own business, it’s smart planning to know how much money you need to open and stay operational until you get your first paying customers. Having a detailed list of your startup costs is an effective way to avoid surprises that could put you at a competitive disadvantage as you try to get off the ground. The process of estimating your startup costs doesn’t need to be complicated, but it should be thorough. You can use a spreadsheet to tally your startup expenses, but a pen and paper works, too. Your estimate of startup costs should include everything from licencing fees and insurance to the cost of your domain name and buying office furniture. To get the most accurate estimates, contact retailers and service providers to get exact costs. Down the road, you probably plan to draw a salary from your business, but that’s unlikely to happen during the startup phase. So, consider including the amount of money you need to cover basic living expenses since that’s a startup cost, too. Of course, you need an estimate of startup costs if you’re seeking funding from investors, but it is especially important if you plan to fund your startup with your own money. When you’re the funding source, you might underestimate how much money you need, because you’ve based it on the amount of cash you have on hand. If you do that, you could run out of funds before you open your doors. Even if you plan to fund your startup yourself, a thorough estimate gives you a clear picture of when it might be appropriate to take out a loan. Spending time creating an estimate of your startup costs lets you know exactly how much money it takes to stay afloat during your company’s first days open, so it stays that way to see profitable days.