Final answer:
Start-up costs are crucial for new businesses, while operating expenses are ongoing costs. Understanding and managing these expenses are vital for financial health.
Explanation:
Start-up costs refer to the expenses involved in starting a new business, such as purchasing equipment and setting up a physical space. These costs are crucial for getting the business off the ground and include both tangible and intangible resources needed for operations.
Start-up costs are distinct from operating expenses, which are the ongoing costs incurred in the day-to-day running of the business, such as utilities, salaries, and rent. Understanding and managing both start-up costs and operating expenses are essential for the financial health and sustainability of a business.
For example, buying a coffee machine for a new café would be a start-up cost, while the monthly electricity bill to run the café would be considered an operating expense.
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