Starting a business is an exciting process, but it's also something that comes with a lot of challenges to consider. For instance, you're going to need to figure out what you're going to sell, how you're going to set yourself apart from the market competition, and how you're going to make a consistent profit.
One of the most important things to determine before you launch your company, is how you're going to afford to keep it up and running. Most entrepreneurs need to start their business with a loan. However, before you can apply for that kind of funding, you're going to have to assess the costs that you can expect to pay during your first year of trading, so you know how much money you need.
Here are just 5 of the significant startup costs you can't afford to ignore when you're launching your new company.
1. Insurance
You need to make sure that you're protected from all the many things that can go wrong when you launch your own business. Although you need to be positive and hope for the best, there's always a chance that a single accident or an unhappy customer could be enough to bring your company crashing down around you if you don't have the right protection in place.
Most companies will start with basic general liability insurance to protect their operations and assets. However, you may need to consider other forms of coverage too depending on the kind of business you run. For instance, you may need errors and omissions insurance to protect you if you're an accountant, or product insurance in case your items are defective in any way. It's also a good idea to get commercial property insurance if you have a business premise, or commercial auto insurance to defend a company vehicle.
2. Licensing And Permits
After you're done thinking about the insurance you need to put in place to protect your company, it's time to consider the business licenses and permits that you need to access before you can get up and running. The permits and licensees that you need will depend on a lot of things, including your business location and type. You'll also need municipal, federal, or state licenses too. Federal licensees cover activities like selling alcohol, broadcasting on TV or radio, and transportation and logistics.
If you're not sure what kind of licensees, you need to get started it might be a good idea to speak to a professional in your area. A business planning expert or an accountant might be able to give you some insights. You could even think about talking to a professional business lawyer.
3. Marketing Costs
Generally, when you're just getting started in the business world, it's not a good idea to spend too much money on marketing too quickly. You'll find that most experts recommend dedicating about 8% of your total revenue in total to marketing. However, you might want to go higher than this if you're looking for an opportunity to grow your brand as quickly as possible. Margins are very important when you're running a new company, and it's important to note that cash may be tight - so don't go over the top.
Still, even with limits on how much you spend on your marketing, you can't afford to ignore this expense entirely. If you want your customers to find your business and start giving you revenue, you're going to need to spend something on getting your name out there.
4. Equipment And Supplies
Before you start applying for loans or looking for investments for your business, it's a good idea to make a detailed list of all the things you'll need to move your company forward, so you're not caught off-guard. For instance, you might need specialist items like 3D printers or professional ovens if you're a restaurant. You could need to invest in company vehicles and computers too.
There may also be some recurring expenses to consider, such as office supplies like printer ink, paper, and pens. Planning how much you need to spend on these supplies now will give you a basic overview of how much it's going to cost to get your company off the ground.
5. Utilities
Finally, remember that there are going to be some expenses involved in keeping your business running. Factor in expenses like gas, internet, water, phone, heating and cooling bills too. All of these utilities are going to come out of your business bank account each month.
It's easy to forget that you still have utilities to pay for even if you're using your home as an office. However, it's important to remember that the utilities that you pay for with a home office are taxed slightly differently.
