Start-Up costs are the things you are going to need to get the business giong i.e. furniture, IT, stock / materials etc. These are mainly one off payments that do not come again.
Running Costs are the day to day costs of running the business usually calculated in terms of monthly or annual costs. These costs will be for things like power, staffing, materials etc.
Fixed and Variable Costs
Fixed costs are ones that do not vary with sales. For example, one of the fixed costs of a high street shop is the rent paid for the property. The rent is still the same whether the shop sells one item or hundreds.
Variable costs are ones that vary with sales. For example, imagine that a shop buys in books for an average price of £5 each. It then sells the books for a higher price. For the shops the variable cost is £5 per unit.
Heres a quick video clip on Fixed and Variable costs:
Does your idea have the potential to succeed? You will need to run your business idea through a validation process before you go any further.
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