when starting a business entrepreneurs should conduct an assessment of their financial needs and expenses and err on the high side common expenses for a new business include rent and utilities salaries or wages equipment and fixtures licenses inventory advertising and insurance among others since startup costs can be a significant hurdle undercapitalization is a common issue for young companies 
because of this small business startups should create a monthly cash flow projection for their first year of operation at least and balance it with projected costs between the equity the entrepreneur contributes and the money they are able to raise from outside investors the business should be able to be sufficiently capitalized in some cases an undercapitalized corporation can leave an entrepreneur liable for business related matters this is more likely when corporate and personal assets are commingled when the corporation s owners defraud creditors and when adequate records are not kept 