Sep 4 2010

Let’s imagine we are thinking of getting into the online t-shirt business, we can use a spreadsheet to calculate the estimated costs of running the business to profitability before even getting started. If you are thinking of selling t-shirts online its good to track the base cost per shirt, the markup per shirt, shipping costs, the monthly operating cost. Having these figures you can calculate the total price of the shirt (base cost + markup + shipping) to for each item and how many shirts you would need to sell to cover your operating costs. If your business plan is simple, such as this, the minimum you can do is create a spreadsheet to describe it and model your business.

You can use Microsoft Excel or with spreadsheet document in Google Docs. I’ll be using Google Docs but the following would also work in Excel. In Google Docs create a new spreadsheet. In the new spreadsheet add a header for each variable you would like to track, such as base cost, markup, shipping, operating cost, expected sales, and expected gross profit.

Let’s say that it costs \$10 for the each shirt, and we would like to make \$4 off of each shirt sold, and that on average it costs \$3 to ship, we can easily calculate what our recommended sale price of each shirt is by adding all of this together. To add it all together in the Cost/Item cell, type into the cell and enter the equal (=) symbol. This would allow tell the spreadsheet that this cell will be a formula. You can add two values from two different cells by the something like the following = A2 + B2 + C2. The formula will add the value at A2 with that of B2 and C2 and put the computed value in the cell with the formula.