Case Study: The First 90 Days

April 13, 2006

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Suppose you have a submarine sandwich shop located in Cedar Rapids, Iowa. Here's a look at the cash you'll need in the first 90 days of operation. For a look at the cash you'll need to get the shop off the ground, using the same example, see our case study on startup costs.

Working Capital Dollars Needed
Advertising	$600	Budgeted newspaper and shopper at $200/month.
Bank service fees	$100	Not a significant fee in this type of business.
Credit card fees	$0	Credit cards will not be accepted.
Delivery charges	$0	Amount included in inventory costs.
Dues and subscrip.	$50	Trade magazines for analyzing restaurant trends.
Health insurance	$0	Employ retirees and high school kids, no insurance.
Insurance	$450	All business insurance including worker's comp.
Interest	$1,500	Loan for $60,000 at 10 percent, interest for 90 days
Inventory	$1,000	This is an expansion of food inventory
Lease payments	$900	Oven leased at $300 per month
Loan payments	$0	Interest only due the first 90 days
Miscellaneous	$1,000	Amount for contingencies
Office expense	$100	Minimal office expense
Payroll-employees	$14,196	Computed as above
Payroll taxes	$1,420	Is 10 percent of payroll
Professional fees	$50	Using your basic bookkeeping
Rent	$3,000	Building at $1,000 per month per bid
Repairs and maint.	$200	Expect minimal based on new equip. and lease
Salary of owner	$0	Owner has saved enough cash and wife works
Sales tax	$0	Cash sales, sales tax is paid by customer
Supplies	$100	Internet fees and various charges
Telephone	$300	Business rate of $100 per month
Utilities	$1,200	All utilities estimates for 90 days
Total	$26,166	Working capital needed for the first 90 days

The total amount of working capital needed for this sub shop is $26,166. This is an estimate of the amount that this new business will need from the first day the business is open through day 90. Refer to cash needed to get to opening day to compute the amount of cash needed for starting the business. See getting a loan for the steps necessary to obtain financing for your new business.

If you're interested in estimating your costs beyond the 90 days, see our discussion of managing your cash flow.