There are many things you will need in order to start any cottage company.

• Knowledge of the product or service you will provide.

• Skills to add value to the product or service.

• Resources and equipment to help you add value.

• People or other businesses who will buy what you produce.

Your Resource Worksheet (see the appendix) will help you clarify what you already have in the way of knowledge, skills, resources and potential customers. You can also use it to compare to the requirements for each of the more than one hundred Cottage Income Guides on this website.

How much money will you need to start your cottage company? Of course, you must know this before you select your business. If you only have a few hundred dollars, you don’t want to start a business that requires $20,000 to set up.

To estimate startup costs you will need to carefully research how much it will cost to set up your business. This includes the cost of preparing and equipping your office, getting required licenses and professional memberships, getting the phone hooked up and paying for your initial advertising.

Estimating operating costs can be difficult because it requires that you estimate your living expenses as well. Most people who have been employees spend as much as they make. They’re not sure exactly how much they need to live on. However, by starting with your current net (after taxes) salary, you can roughly calculate whether you require more or less to live on. If you operate your business as a proprietor, your income taxes and self-employment (Social Security) tax will be paid by your business.

Other operating costs are those expenses that you will pay each month to keep the doors open (fixed or overhead expenses) as well as those that increase as sales increase (variable expenses).