Ten Costs to Expect When Your Start Your Business
Starting a business is a very complex affair that requires a lot of planning and thought. You’ll need to compile a comprehensive business plan, outlining how you intend to start the business, your staff and financing models and projections of where you expect the business to head. A big part of this plan will be listing and anticipating your starting expenses and identifying where you expect to have to spend money during your business opening phase.
Some of these expenses are obvious, others are less so, and some might come as a surprise. Let’s spend some time looking at 10 costs you can expect when starting your business.
Market Research Costs
As part of starting your business, you’ll want to do a reasonable amount of research in your area or intended market to ensure several things. You’ll want to ensure that there is room in the market for your business, as well as interest in your product. There is a reason that market research forms part of an MBA qualification, and it’s one of many benefits of studying an MBA programme, as Aston Online points out. As part of this market research, you might need to employ people to canvas the area, give out samples, or even just pay for materials to conduct this research.
You might need to involve a consultant to assist with this too, all of which will cost your business money.
Your staff are going to need equipment to perform their jobs. This might be computers to work on or point of sales systems if you’re opening a store. Consider all the different things your staff might need to do their job. Don’t forget to make provisions for things that you might not think about immediately, like software licences or a coffee machine for the break room. Everything your office or staff need to do their work is part of the equipment you’ll need when you open for business.
Rental Fees and Deposits
If you need physical office space, which is highly likely, you’ll need to consider a few things here. You’ll need to pay a deposit on your rental, as well as the rent itself. You’ll also need to spend some money outfitting the office with furniture and a reception area, including seating for visitors. You’ll also need to equip a meeting room or two with a large table and chairs. Rental fees and office furniture are likely to make up a large part of your start-up costs.
Business Start-up Fees
You’ll need to register your company and pay any applicable fees to get the licences and permits required to trade. This depends on your local laws, but it is something that is going to cost some money. Filing articles of incorporation and similar will have related costs, and if you need licences for what you’re selling, you’ll need to obtain those too.
If you don’t do any sort of advertising, you’re likely to end up not getting any customers. You need to spend money on getting your business name out there, and that’s going to come in the form of advertising in its many different forms. Advertising doesn’t come cheap, however, so you want to have a solid budget and ideas about where to best advertise. Your market research might inform some of these decisions. You’ll also need an online presence.
An Online Presence
As part of your advertising strategy, having an online presence should be a top priority. A website is the start of this presence, but having social media profiles where your customers or potential customers can interact with you and you can make announcements of specials and promotions to your customers is a great way to drum up extra business. You might hire a firm that specialises in social media or hire someone in house to do this, but whichever way you choose to do it, it will generate an additional expense for your business.
Stock or Materials
If you’re opening a retail store, you’ll naturally need stock to sell. This stock is likely to be a big expense, even if you use procurement strategies like just-in-time supply chain management. If you’re manufacturing equipment, you’ll need to purchase raw materials. You’ll need capital to cover your initial purchases.
All Your Office Supplies
It might seem like an insignificant expense, but people are often taken aback by how much office supplies end up costing. This includes all consumables you’d use around the office. Stationery, the kitchen coffee and milk supplies, printer toners and paper – the list is much longer than you might expect initially. Consider all the things that will need occasionally replenished around the office and you have a good list of all your office supplies.
Before you purchase all your office equipment and stock, you’ll want to cover it from fire, theft and other disasters that might occur. For this, you’ll need business insurance. If you own vehicles, they will also need insurance. Insurance can be a considerable expense if you have a high value of equipment and stock to cover.
You need to pay your staff once you open your doors, and even during the initial planning and setup phases. You’ll also need to pay yourself unless you’re prepared to work for no salary initially. You need to plan for the salary expenses, but you’ll also need to make provisions for the payment of professional consultants that you use too. You might need assistance from an attorney during your business formation, or from any number of other consultants. You’ll also have service providers doing installations of your furniture or office IT equipment that will need to be paid too.
As you can tell, you need to give a lot of thought to the expenses you’re likely to encounter in the early days of your business and plan well to have enough funding or a big enough business loan to cover them all. Being ready for some unexpected expenses is also advised as you can’t anticipate and plan every expense you’re going to encounter. Being prepared for most of them will leave you in better stead to deal with those that are unexpected.