CAPEX Budget By Peter Baskerville 28/07/2019

Three key budgets for startups Profit Worthwhile + breakeven CAPEX Cost to build infrastructure Cashflow Manage launch to breakeven Profit – Will it all be worthwhile? Is the breakeven achievable? CAPEX – What will it cost to build the initial phase? Cashflow – Can I pay my bills each week between launch and breakeven?

Capital Expenditure = CAPEX “$ needed to get the plane off the ground” - Can be – tangible (physical) or intangible (non-physical) Tangible – vehicles, equipment, computers, shop fittings, leasehold improvements, initial stock.

Don’t forget intangible CAPEX Statutory – architect, council fees, professional advice, business formation costs. Prepayments – insurance, rent in advance. Establishment – staff (training, set-up time) Deposits – rent (1-6 months) – utilities.

CAPEX & Business Model Your business model determines your CAPEX. Undercapitalization is one of the greatest reasons for business failure. Design must match resources – Paper, balsa, radio-control, ultra-light, Cessna, Jumbo. Change the model to change your CAPEX.

Changing your business model Value proposition – goods Vs service Customer relationship – personal assistance Vs self-service Channel – Physical Vs digital Activities – Production Vs Problem solve Partners – Wholesale Vs Retail

CAPEX - Equipment Computer Equipment Machinery Vehicles Furniture & fittings Leasehold improvements Installation of equipment

CAPEX – Location/Administration Lease deposits Rent in advance Licenses & Permits Deposit (electricity, gas, water) Business structure costs Legal fees - agreements Accounting fees - advice Prepaid Insurance Pre-opening staff training & wages

CAPEX - Intellectual property Online domain names Business Name registration Logo design Trademark fees Patent Fees Patent attorney costs

CAPEX – Research & Development Courses - mentor Market Research Customer development Prototype development Materials & publications Business planning

CAPEX - Opening stock Merchandise Packaging supplies Office supplies Cleaning supplies

CAPEX - Marketing Opening advertising Printing & Stationary Web Development Signage Pre-opening travel expenses Pre-opening entertainment expense

CAPEX – Contingency

For the period leading to launch CAPEX budget Startup Pty Ltd CAPEX budget For the period leading to launch Item Total Amount Mth1 Mth 2 Mth 3 Check sum Tangible   Equipment 10,000 - Fixtures and fittings 20,000 Construction 15,000 7,500 5,000 2,500 Total tangible 45,000 22,500 Intangble Statutory Prepayments 6,000 1,000 Deposits Establishment Total intangible 28,500 3,500 73,500 30,000 17,500 26,000 Assumptions: Detail here the assumptions that you have made in preparing the figures. List the capital expenditure items required to launch your business. Estimate the total expenditure required (with assumptions) Allocate the amounts over a monthly time frame (no specific date) Check sum – validate maths