Are you interested in finally taking steps toward starting your own business? Are you curious to find out how to budget for starting a business? If so, then you'll want to learn all that you can about the cost of starting a business.
Knowing the different costs that you can expect will help you budget accordingly. It will help you understand what you can project and how much you should set aside for when those costs accrue.
See below for an in-depth guide on the cost of starting a business. Be sure to consider every piece of information that's listed below on business startup costs.
5 Tips To Stay On Your Business Budget
1. Don't Look too Far Ahead
Probably the number one piece of advice that you've received for budgeting a startup business has been to think long-term. While that certainly has a place in your planning, it's also important to not get too fixated on where you want to go.
Before you can build that million-dollar business, you need to begin as a startup. While you undoubtedly have high standards for where the company will go, it's important to think about the process between startup and success.
For example, say one of your goals is to have at least 100 clients by the time your company's fifth anniversary rolls around. How do you plan to get there? What has to happen between now and your fifth anniversary to make that happen?
What kind of costs will need to be added to increase your chances of success? There are things like marketing, networking, and a customer relations management system that can be a worthwhile expense to reach your goal.
2. Understand Startup Costs
There will be other expenses that make their way to the fold as you grow, but for now, your number one concern is startup expenses.
Unfortunately, not all startup costs are universal in the corporate world. The costs you can expect will depend on the industry that you're stepping into. Some industries have more costs than others.
However, there are some startup costs that you can plan for before conducting research on industry-specific costs (more on that in a moment).
Things such as renting a facility, hiring a consultant, advertising your new brand, paying your startup staff, and materials for your product/service are a good place to start.
There are two important things to calculate, here: assets and expenses. Your assets could be things such as startup cash, land you own, the equipment you bought, inventory that you have, patents, and so on.
Expenses are things along the lines of research you perform, product testing, lending money, manufacturing costs, and marketing costs.
The accumulation of your assets compared to your expenses will be the startup costs that you can expect. While financing business might sound overwhelming, there are many people that have done it successfully.
3. Research Your Industry-Specific Costs
As previously mentioned, there will be some costs your business will pay that are specific to the industry you've stepped into.
For example, a startup construction company will have expenses such as buying and renting construction equipment, materials for the job site, a membership to have access to bid on projects, and so on.
1. Don't Look too Far Ahead
Probably the number one piece of advice that you've received for budgeting a startup business has been to think long-term. While that certainly has a place in your planning, it's also important to not get too fixated on where you want to go.
Before you can build that million-dollar business, you need to begin as a startup. While you undoubtedly have high standards for where the company will go, it's important to think about the process between startup and success.
For example, say one of your goals is to have at least 100 clients by the time your company's fifth anniversary rolls around. How do you plan to get there? What has to happen between now and your fifth anniversary to make that happen?
What kind of costs will need to be added to increase your chances of success? There are things like marketing, networking, and a customer relations management system that can be a worthwhile expense to reach your goal.
2. Understand Startup Costs
There will be other expenses that make their way to the fold as you grow, but for now, your number one concern is startup expenses.
Unfortunately, not all startup costs are universal in the corporate world. The costs you can expect will depend on the industry that you're stepping into. Some industries have more costs than others.
However, there are some startup costs that you can plan for before conducting research on industry-specific costs (more on that in a moment).
Things such as renting a facility, hiring a consultant, advertising your new brand, paying your startup staff, and materials for your product/service are a good place to start.
There are two important things to calculate, here: assets and expenses. Your assets could be things such as startup cash, land you own, the equipment you bought, inventory that you have, patents, and so on.
Expenses are things along the lines of research you perform, product testing, lending money, manufacturing costs, and marketing costs.
The accumulation of your assets compared to your expenses will be the startup costs that you can expect. While financing business might sound overwhelming, there are many people that have done it successfully.
3. Research Your Industry-Specific Costs
As previously mentioned, there will be some costs your business will pay that are specific to the industry you've stepped into.
For example, a startup construction company will have expenses such as buying and renting construction equipment, materials for the job site, a membership to have access to bid on projects, and so on.
On the flip side of this concept, you may be able to find unique funding opportunities depending on the specific industry you’re in. For example, if you’re starting a product based company, you can incorporate purchase order financing in your business plan to help get your business off the ground during the early stages of development.
The startup companies that fail are the ones that don't do a good enough job of accounting for their industry-specific expenses.
Luckily for you, this can all be accomplished in your business plan. It will hold you accountable (pun intended) to listing all the costs and expenses that you'll face as a growing company.
You can perform this research by asking your mentors, hiring consultants, performing online searches, shadowing current companies in the industry, and so on.
Don't beat yourself up if there are a few costs you overlooked as you start. As long as it isn't a substantial amount of separate expenses, you can always adjust your company's budget for them.
4. Think of Necessary Certification
Here's another cost that could be specific to your industry. Certain industries require that their companies be certified for unique purposes.
For example, a custom pool company needs to have a contractor license. They also are required to pass regulated tests on local electric codes and measurement codes that are specific to the city/state they conduct business in.
Make sure that your company has all of the necessary licensing, certifications, and permits that it needs. Without it, your business will be heavily fined.
5. Consider Your Insurance Needs
It only takes one error or mistakes for all of your startup company's hard work to come crashing to the ground.
Not only is it illegal to not have proper insurance for your company, but it's also irresponsible.
Many business owners see it as a way to cut costs, but your insurance is of vital importance to protecting yourself, your company, your workers, and your clients.
Having things such as liability insurance and workers' compensation will help all parties be compensated for any damage to property.
Also, many customers use it as a way to gauge the reliability of your business. Without insurance, they'll go running for the hills.
Uncover the Cost of Starting a Business in Your Niche
Now that you've seen an in-depth guide on the true cost of starting a business, you must take all of this to heart.
Take your time at this stage of business launch planning. It's better to have more time to research and plan for upcoming costs than to rush into unforeseen expenses. This can also help you understand the amount of money you'll need to request in a business loan.
Be sure to browse our website for more articles on starting a business, as well as many other helpful topics! Visit the Startups section of the Bootstrap Business right now to learn how to launch your company on a shoestring budget.
The startup companies that fail are the ones that don't do a good enough job of accounting for their industry-specific expenses.
Luckily for you, this can all be accomplished in your business plan. It will hold you accountable (pun intended) to listing all the costs and expenses that you'll face as a growing company.
You can perform this research by asking your mentors, hiring consultants, performing online searches, shadowing current companies in the industry, and so on.
Don't beat yourself up if there are a few costs you overlooked as you start. As long as it isn't a substantial amount of separate expenses, you can always adjust your company's budget for them.
4. Think of Necessary Certification
Here's another cost that could be specific to your industry. Certain industries require that their companies be certified for unique purposes.
For example, a custom pool company needs to have a contractor license. They also are required to pass regulated tests on local electric codes and measurement codes that are specific to the city/state they conduct business in.
Make sure that your company has all of the necessary licensing, certifications, and permits that it needs. Without it, your business will be heavily fined.
5. Consider Your Insurance Needs
It only takes one error or mistakes for all of your startup company's hard work to come crashing to the ground.
Not only is it illegal to not have proper insurance for your company, but it's also irresponsible.
Many business owners see it as a way to cut costs, but your insurance is of vital importance to protecting yourself, your company, your workers, and your clients.
Having things such as liability insurance and workers' compensation will help all parties be compensated for any damage to property.
Also, many customers use it as a way to gauge the reliability of your business. Without insurance, they'll go running for the hills.
Uncover the Cost of Starting a Business in Your Niche
Now that you've seen an in-depth guide on the true cost of starting a business, you must take all of this to heart.
Take your time at this stage of business launch planning. It's better to have more time to research and plan for upcoming costs than to rush into unforeseen expenses. This can also help you understand the amount of money you'll need to request in a business loan.
Be sure to browse our website for more articles on starting a business, as well as many other helpful topics! Visit the Startups section of the Bootstrap Business right now to learn how to launch your company on a shoestring budget.
