If you want to start an online business that is successful, you need to put a lot of time and effort into your business plan. One of the most important parts of this plan are your financials.

From the first day you decide to start an online business, you should begin thinking about your costs and expected generated income.  Without a balanced financial plan, you will not be able to keep your business afloat in difficult as well as good times, and you will never be able to grow by getting commercial loans.

The three areas included in the financial section are the income statement, cash flow projection and balance sheet.  You will generate the numbers for these financial records by establishing your startup costs and operating expenses.

Startup costs include all the investments you make to start your online business. The costs are determined by the kind of products or services you offer and your working capital, equipment, supplies and inventory.  Jot down the items you know for sure will be included in your startup costs. Then, add to the list as you come across other costs.  The expenses consist of such items as:

1) The cost of incorporating your business name, buying your URL, and conducting any trademark searches.

2) The cost of registering your business with the city, state and federal governments and obtaining any necessary permits and licenses.

3) The purchase of any computers and software, office furniture and equipment, utilities, photographic equipment, and other office supplies. This includes web design and hosting.

4) Any downpayments for rental fees for office or warehousing space.

5) Purchase of initial inventory.

6) Membership in trade and business organizations and publication subscription fees.

 Operating Expenses include the costs for the daily operations once you start your online business and are up and running.  Most operating expenses are paid on a regular basis, such as weekly, monthly or quarterly.  The standard operating expenses may consist of such items as:

1) Monthly rental and leasing agreements.

2) Wages and salaries.

3) Utilities.

4) Advertising, marketing and promotions.

5) Office supplies.

6) Ongoing inventory, storage, shipping and distribution.

7) Cleaning and office/equipment maintenance.

When you start your online business, you will want to have at least enough money to pay for your startup and six months for operating expenses. If you can put aside enough for a year or two, all the better. 

Bottom line: You need funds to cover all costs until sales bring in enough money to at least break even. It may take you up to three years to begin making a sizeable profit.