3. Total Your Startup Expenses and Capital

In this video, you will total your startup expenses and capital.

This gives you an idea of how much money your business needs to open and what resources you already have available.

This helps you determine how much funding to seek in business loans.

To total your startup expenses and capital, you will use the “SUM” function.

A “function” is a standard formula used to work with and calculate data.

Functions are faster and more accurate than manual calculations.

They also allow you to quickly repeat calculations in different parts of a spreadsheet.

The “SUM” function adds the values in a range, or group, of cells.

To begin, use the “SUM” function to find the “total investment” Type “equals sign,” s-u-m, and select the SUM from the suggestions.

Then, select the range of cells with investment amounts to total those values with the function.

Repeat this for each “total” row in your spreadsheet to find the total for each “source of capital” and “startup expenses” grouping Your spreadsheet will automatically calculate the categories in your summary statement.

This gives a snapshot of your available capital and your expenses, which allows you to determine if you need additional funding to meet your expenses or find a way to reduce costs.

Calculate your “total source of funds” and your “total startup expenses” to complete the summary statement.

Next, estimate a reserve for contingencies.

Contingencies are unexpected expenses.

It always costs more to open a business than expected, so set aside money for costs you haven’t predicted.

Your reserve should be at least twenty percent of your total startup costs -- or enough to cover three-to-six months of operating expenses.

Estimate this based on your “total startup expenses."

Your contingency reserve is automatically added to your “total startup expenses."

Next, add information about security and collateral for your loan proposal.

This tells lenders who is guaranteeing your loan and what they can offer for collateral.

“Collateral” is something you own that the bank can take if you fail to pay off your debt or loan.

List any real estate, vehicles, or other investments that you can use to guarantee a loan.

List the value of each item and a brief description.

Lastly, note the owners of your business and any loan guarantors other than the owners.

Now, it’s your turn: Use the SUM formula to calculate category totals, Estimate a contingency reserve, Complete the “summary statement,” And add owner, loan guarantor, and collateral information.