How can total startup costs be calculated?

Calculating total startup costs involves not only identifying the initial financial requirements for establishing a business but also taking into account the working capital needed to sustain operations during the initial period before the business becomes fully operational.

Selecting the sum of one-time startup costs and a range of operating costs for a period, such as three months to one year, is appropriate because it encompasses both the initial investments necessary to set up the pharmacy—like equipment, licenses, and renovations—and the ongoing operational expenses needed to cover day-to-day functioning. This approach ensures that the pharmacy is adequately funded to handle its initial operational phase without cash flow interruptions until it can generate a steady revenue stream.

In contrast, other methods for calculating startup costs do not comprehensively cover the full spectrum of expenses required to launch and stabilize a business. For instance, simply adding fixed and variable costs or combining cost-of-goods-sold and overhead costs may overlook necessary factors, particularly the lack of a defined time frame for covering operational sustainability. The chosen method provides a holistic view essential for effective financial planning in a new community pharmacy setting.