Hidden Costs Of Launching A Startup Company

hidden costs launching startup business

Starting a business in today’s climate is, well, very ballsy; from all the pre-planning, initial investing, gathering (silent) partners and getting noticed to calculating the risks and working with them, it takes a pretty big chunk of energy and thought to get things going. Naturally, that entire jam aside, we all know that a focused entrepreneur is a successful entrepreneur which is making the whole ride even more exciting, challenging and heated. For everyone who’s been dreaming of starting their own business and being their own boss, here are just a few cautionary tips to pay attention to before quitting your day job: 

Permits, Licenses and Dues 

The permits and licenses are rarely one-time expenses which is why you need to factor in how often they need to be renewed and what the renewals will cost. Before saying “yes“ to an office space you fell in love with make sure you put everything on paper and calculate the expenses. 

Further, it's advisable you set a little money aside for joining networking organizations like industry / professional groups and / or your local chamber of commerce. Participation in these business groups and events can be of essence as it can provide you with great exposure and will keep you up-to- date on the latest news. Still, be very selective about the groups you join; some annual memberships can easily run hundreds of dollars and that's not the sum you can spend at this moment. 


When running a small business, there are several employee expenses that must be taken into account regardless of the number of people on your staff. Apart from the big things such as salaries, benefits, payroll taxes, and retirement plans you've probably already factored in, you have to understand that there are many more smaller expenses that quickly add up, such as: 

Professional certifications, conferences, classes and training 

● Paid vacation time, sick leave and maternity leave 

● Employee turnover costs including hiring & training employees

Office perks like team building activities, ergonomic seating or Friday afternoon pizza parties 

No matter how optional some of these expenses seem, they aren't; for instance, if you don’t invest in a comfortable, clean and enjoyable environment, you may end up paying for it later with a higher employee turnover. Further, if you don't offer comprehensive employee benefits, some of your best employees will switch companies in a blink to where their conditions are met. These and plenty other points are something to think about. 

Surety Bonds 

The use of surety bonds is a government-imposed requirement in a number of different industries; "surety bond regulations are put in place to keep unqualified professionals from accessing certain markets, thus deterring unethical business practices". 

Visit Stokes Bonds to know more about surety bonds. Depending on the field of work you are in, the types of bonds can vary: most commonly, entrepreneurs are dealing with commercial surety bonds, contractor bonds and fidelity bonds. 

What often happens is that new business owners go absolutely unaware of their need for a surety bond until they’re in the middle of the licensing process. "After applying for a bond, business owners might find themselves needing to pay a premium that could cost anywhere from $100 to $20,000. The actual surety bond quote will depend on how much bond coverage a business needs combined with the owner’s (or owners’) credit score". Luckily, business owners who aren’t able to pay for the full premium upfront are often offered financial help from surety bond providers which is making the whole thing a bit easier on the owner. 

Repairs and Replacements 

Even though this seems as something you will deal with "on the go", truth is – expenses are bigger than expected and should be taken into consideration from the beginning. Workplace accidents happen, things break... and you’ll have to repair or replace them if you still need the equipment, right? 

Instead of dealing with the problem when it occurs, calculate the approximate annual maintenance costs into your spending budget to keep equipment in good running condition and avoid surprises that will hit you on the pocket. 

Launch Your Lean Startup

Good luck on your venture to entrepreneurship and make sure you think things through before acting on them! Budget for your business expenses to avoid errors. Bills are a big part of business, but planning for them is what separates successful startup companies from failures.

startup guide

I hope you enjoyed this article about the hidden costs of launching a startup that you need to keep in mind. 

Interested in more articles about frugal finance?

Read My Posts:

- 5 Startup Business Models To Consider

- How To Grow Your Business Debt Free

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