6 Costs to Consider When Starting a Small Business
The Western world is no longer in a strong financial position, which means startup businesses can’t easily secure enough venture capital to launch and then worry about making a profit. Instead, the only metric tied to success is profitability, which means businesses manage their outgoings tightly from day one. To help you out, we’ve collated six costs that all startup small businesses need to consider.
Licenses and Permits
You will need to hold certain licenses and permits to legally launch your business, and the costs and extent of these will be determined by what type of business you have. The best way to understand what costs you’ll face is to contact your local authority, as each county will have slightly different regulations in place.
If your business is brick-and-mortar, you have to write down the costs of energy, water, broadband, and phone bills. You can easily compare business water rates and energy contracts by using a reputable comparison site. However, you should keep in mind that not every provider will show up when you compare business water rates and other utilities, so be sure to check directly as well.
You need to have a business plan in place before you get started, and this will include a thorough analysis of your predicted expenses including business water contracts and so much more. For example, you’ll have to research the market, which will influence everything from product development to marketing. In some cases, you may have no option but to hire an external research company, which will need to be factored into your cost analysis.
Potential customers will never find your business if you don’t make an effort to tell them it’s there. Marketing costs will be relatively high in the early stages because you need as much exposure as possible, but you need to remember that there will be ongoing costs. If you need help keeping marketing costs to a minimum, take a look at this article from Forbes.
Funding and Borrowing
You will need money behind you to launch your business successfully, which will likely include taking on debt from the bank. Depending on where you secure a loan, you may have to pay an initial fee. Then, once you’re trading, you will have to keep up with regular payments to avoid destroying your company’s credit file.
If you’re launching into retail, manufacturing, hospitality, or other similar industry, you may need to invest in initial stock. You will need to include these costs in your business plan, as well as build a strategy for ongoing inventory management. Purchasing initial stock involves making accurate predictions about trade levels, as over-estimating may leave you with waste.
Every business will have a different cost analysis, which is largely tied to its industry and target demographic. However, the areas outlined above are costs that all businesses will have to consider – the true picture of your business expenses will come to light during the planning stages.