Accurate calculations are crucial to the financial health of any business. It is essential to use the appropriate tools when planning the cost of starting up and calculating your breakeven point or analyzing an potential acquisition. Business calculations can be straightforward or complex however the results are crucial.
Start-up costs are the expenses needed to begin a new business, including office furniture, office supplies and equipment. The costs for starting a business can include research expenses for market research and industry analyses. An accurate estimate of startup expenses can be calculated by examining the financial statements of similar businesses in your industry, or by speaking with your bookkeeper or accountant for guidance Continued on particular cost categories. It’s also recommended to include an insurance buffer of 10%, when you calculate your initial costs to account for unexpected costs.
Calculating your total cost will allow you to determine what profit, if any you can expect to earn after selling all of your products or services. You can determine your cost of goods sold (COGS) using a formula. This figure is important to determine prices and profit margins.
The most effective business calculators come with a variety of functions and are easy to use. Some calculators for business come with built-in functions for amortization or interest rate conversions. Certain business calculators come with visual graphs, and others connect to computers so that calculations can be safely stored. There are also business calculators that come with more advanced features, for instance, an NPV calculator, which makes use of the concept of discounted cash flow to determine the net value of cash flows in the future.