BU 423 Unit 6 startup cost and runway sheet example

Four Hundred Eighty-Seven Dollars Left in September: A Startup Cost and Runway Sheet for a Composite Mobile Hose Van, Twelve Months of Cash Under a Slow and a Faster Year

Student Name

Business, Herzing University

BU 423: Entrepreneurial Strategy

Instructor Name

March 25, 2026

Four Hundred Eighty-Seven Dollars Left in September: A Startup Cost and Runway Sheet for a Composite Mobile Hose Van, Twelve Months of Cash Under a Slow and a Faster Year

What the Sheet Answers

This sheet estimates what Fieldside Hydraulics, the composite hose van venture used throughout this course, must spend before its first call, what it spends every month afterward and when its bank account would run out. It tracks cash rather than profit, because a new business fails when it cannot pay a bill, not when an income statement shows a loss. The funding question itself belongs to the next unit; here the working assumption is that the founder raises $90,000, and the sheet tests whether that is enough. All prices below are estimates for the composite case, not quotations from real suppliers.

One-Time Costs of Opening

These are spent once, before or at launch, and each has a basis beside it.

Monthly Costs

Recurring costs are split into those that stay fixed whatever the call volume and those that rise with each call. Fixed costs come to about $4,580 a month: a $3,000 draw for the founder, $450 for insurance, $600 for a storage bay that holds bulk hose, $180 for phone and dispatch software, $150 for bookkeeping and $200 set aside each month for van maintenance. The founder's draw is included on purpose. A sheet that leaves it out shows a longer runway than the founder could actually live on, and the draw is set at the lowest figure the founder said would cover household costs.

Variable costs are about $177 a call: $140 of hose and fittings at wholesale, $25 of fuel and $12 of card and payment fees. Against an average call of $420, each call contributes about $243 toward the fixed costs, as in the business model canvas. Barringer and Ireland (2019) recommend separating fixed from variable costs in exactly this way, so that cash needs can be tested against more than one level of sales.

How Cash Arrives

Receipts do not arrive when a call is made. Contractors are used to paying equipment dealers on 30-day terms, and the founder expects about 70 percent of call revenue to be invoiced and paid the following month, with the other 30 percent paid by card at the machine. Plan fees of $600 are paid when a plan is signed. Churchill and Mullins (2001) show that the gap between spending cash and collecting it is what drains young firms even when they are growing, and a 30-day lag on most revenue is exactly that kind of gap. In the first month, when there is no prior month to collect from, receipts are only the card payments.

Twelve Months of Cash, Two Sales Assumptions

The table starts in April, the planned launch, with $13,000 in the account after the $77,000 of opening costs is paid from the $90,000 raised. The slow case assumes 155 calls in the year and six priority plans; the faster case assumes 234 calls and twelve plans. Both follow the same seasonal pattern, rising through summer, peaking in October and falling sharply from December to March. The acquisition plan's estimate of about 207 calls sits between them.

When the Account Empties

Under the faster assumption the account never empties. It falls to $4,456 in June, while calls are still building and most revenue is waiting to be collected, then climbs through the fall and ends the year at $17,986. Under the slow assumption the account comes within $487 of empty in September and runs out in February, the eleventh month, when winter calls no longer cover the fixed costs. The slow case also shows the difference between cash and profit. Its accounts would show a loss of about $13,700 for the year, but even the faster case, with a profit of about $9,100, has only about $5,000 more cash at the end than at the start, because roughly $4,100 of March revenue is still owed by customers.

Two things follow. First, $90,000 is not enough, because a venture that survives only if sales run fast has no room for the most likely surprise, a slow start. Raising $100,000 instead would leave the slow case with about $10,500 at its September low and about $6,400 at the end of March, enough to reach the second spring. Second, the numbers point to the months that matter: the first summer, when receivables build, and the first winter, when calls fall. Spinelli and Adams (2016) advise founders to plan for the cash needed to reach the point where the business funds itself, not merely the cost of opening the doors, and this sheet puts that figure at about $100,000 rather than the $77,000 of opening costs. The funding comparison in the next unit starts from that amount. Every cost, rate and month in this sheet is part of the composite case written for the course.

References

Barringer, B. R., & Ireland, R. D. (2019). Entrepreneurship: Successfully launching new ventures (6th ed.). Pearson.

Churchill, N. C., & Mullins, J. W. (2001). How fast can your company afford to grow? Harvard Business Review, 79(5), 135-143.

Spinelli, S., & Adams, R. (2016). New venture creation: Entrepreneurship for the 21st century (10th ed.). McGraw-Hill Education.