A core part of a successful business launch involves knowing how much starting a new business will cost. An estimate of startup costs might ensure you can understand potential profits, conduct a break-even analysis, attract investors, and even secure loans. However, it’s not always easy knowing how much it will cost to get your business off the ground. Before you approach banks for funding or tap into your savings, it might be worth calculating some of the following expenses.
Insurance
Just as you would have insurance for your personal life, you’ll also need it for your new business. Commercial property insurance, auto insurance, public liability insurance, and business interruption insurance are just a few of the many crucial forms of protection when you’re launching a new business. If your business involves giving advice, professional indemnity insurance might also be necessary, alongside cyber cover, if any of your business is performed online.
Office Space
If you’ve opted against creating a home office and prefer to lease a commercial space, this is a cost you’ll need to factor into your startup business budget. The more space you require for yourself and your team, the more money you might need to set aside for monthly or yearly leases. There are also other office-related costs aside from lease payments, such as utilities.
Licenses and Permits
It’s easy to assume that you’ll be able to sell goods and services almost immediately after launching your new business, but that’s not always the case. First, you must ensure you have the most appropriate licenses and permits, which often come with associated costs. A general business license, sales tax permit, professional and occupational licenses, and health permits are a few of the many that might apply to your unique business model.
Inventory
If your business revolves around the sales of goods, you’ll need to set aside money for inventory. Once you start selling items, you’ll be able to use your profits to purchase more, but your initial order will need to be completed with money you secured through funding or savings.
Advertising and Marketing
Putting an ‘open’ sign on your new business premises is not always enough to have customers flowing through your doors or visiting your website. You typically have to generate interest and new customers through advertising and marketing.
There are many different advertising types worth exploring, such as pay-per-click (PPC) ads, social media marketing, mobile ads, and print marketing. Consider your target market when choosing a marketing method to ensure you’re reaching those most likely to require your products and services.
Salaries
The average hourly rate for employees across the United States is $10.95 per hour, factoring in seasonal adjustments. If you’re paying multiple staff a fair wage, you’ll need to set aside several hundred dollars per week for salaries and wages. If you’re nervous about hiring staff and underestimating how much they cost, consider working on your own in the beginning to determine how much help you’ll need during the average working day.
Startup businesses can require a significant amount of money to get off the ground, and there might be costs you haven’t considered when putting your business plan together. At a minimum, factor in these expenses above, and you might have more confidence when requesting loans, funding, and investment to start your new venture in earnest.
