Even after you’ve negotiated your lease and exposed any hidden pitfalls or money “traps,” there are still ways to accidentally underestimate your costs. For example, when we were getting ready to open our doors, we underestimated the amount we would need to train our staff. Labor costs add up quickly-- before any revenue even starts coming in. We also underestimated the amount and cost of paper products, inventory, cleaning supplies, and cleaning equipment we would need prior to making our first sale.
This miscalculation caused us to dip into our cash reserve, which was a financial cushion we were hoping to save. I recommend OVER-estimating whenever possible, as this can only have a positive outcome.
Operating costs are also easy to underestimate. For example, when signing our lease, I asked the electric company to estimate the cost to heat our 2,500 square foot space. I knew we would need to heat the cafe most of the year because of our cold climate, so I was careful to get an exact estimate.