Start-Up Numbers: Costs, Prices and Break-Even for Service Businesses

Before you start a business, a few numbers tell you most of what you need to know: how much it costs to get going, what you can charge, how many customers you need and how long it will take to break even. These figures vary a great deal between industries, which is why it pays to work them out for your own business before you commit.

Start-up costs vary widely

Service businesses are cheaper to start than most, but the range is still large:

• Cleaning: often a few hundred pounds with your own equipment, rising to a couple of thousand with insurance, kit and marketing
• Dog grooming: a home grooming room can cost several thousand pounds once you add a table, bath, dryers and clippers, with training on top
• Mobile mechanic: training can run to a few thousand pounds, before a van, tools and diagnostic equipment
• Aesthetics: training for each treatment, insurance, consumables and a suitable treatment room all add up

A guide to how to open a dog grooming business breaks down the costs of salon, home and mobile set-ups so you can compare them properly.

Pricing: hourly rates and call-out fees

Trade businesses often charge by the hour plus a call-out fee, while treatment businesses usually price per service. Mobile mechanic labour rates are commonly quoted at somewhere between £25 and £60 an hour, with call-out fees on top. Whatever you charge, your price needs to cover travel, insurance, equipment, admin time and holidays, not just the time spent on the job.

Anyone researching how to start a mobile mechanic business should test their prices against local competitors before launching.

Break-even: the number that matters most

Your break-even point is the number of jobs or treatments you need each month to cover your costs. A simple chart of fixed costs against income per job shows how quickly you reach it, and how much difference a small price rise makes. In treatment businesses with higher set-up costs, such as aesthetics, this calculation is especially important. A guide to opening an aesthetics clinic explains the training, insurance and regulatory costs that belong in it.

Five figures to chart in your first year

1. Monthly income: against your break-even line.
2. Repeat customers: the share of clients who book again.
3. Average job value: to see whether prices are keeping up with costs.
4. Enquiries per month: and how many turn into bookings.
5. Hours worked: so you can see your real hourly rate.

Many new owners find it easier to keep these numbers on track with regular support. One-to-one business mentoring can help you set targets, review your figures each month and adjust before small problems become big ones.

A few clear figures make it far easier to see whether a new business is working. For more on charting the progress of new businesses, see our start-up businesses category.