Starting your own business can be a lucrative and satisfying venture, but like all things of value, it comes with a price tag. How hefty that tag turns out to depend on your particular type of business, but mostly all new businesses have start-up and growth costs in common.
It’s important that you be aware of all of the costs. It’s your business. Having knowledge and control concerning your business finances is your job.
Now, doing the math may be outside your comfort zone. But, laying out every anticipated cost and expense will keep you from being blindsided by expenses you never saw coming. You can’t predict them all, but the more you foresee, the better prepared you’ll be.
There are the more obvious start-up expenses.
If you’re renting office space, for example, in addition to paying rent, there’s furniture to be bought and utility fees to pay. Some utility companies require installation fees and a sizable deposit. When every dollar counts and the money is flying out of your hands before you’ve made a single sale, that unexpected $500 deposit hurts.
Know in advance whether your business needs additional insurance and if you need to file for any business licenses and permits which require fees.
Do your startup costs include an initial inventory?
The costs for supplies could range from minimal to major, again, depending on your type of business. A personal chef wouldn’t require as much seed capital as a new restaurant owner, for example. But don’t make the mistake of thinking that you’re in the type of business that doesn’t require any inventory. Just because you haven’t had a need for it yet doesn’t mean you won’t be needing it down the road. Think in terms of computers, scanners, upgraded software, membership fees to pertinent organizations and miscellaneous office supplies. Don’t forget to include those ever-important business cards.
Make sure your start-up costs include letting people know you’ve started your business.
You’re going to need to do a certain amount of marketing and advertising to start and grow your business. Word-of-mouth is great, but only as successful as the number of mouths your business has served. Does your business require a full-blown media kit or ad in the local paper? Maybe all you need to promote your company is fliers and brochures. Can you create your own company website or do you need to pay a graphic artist to design it for you?
Include yourself in your start-up costs.
If you hire someone to work for you, naturally they are going to expect you to pay them. You should expect this from yourself as well. Place a value on your time, particularly if you’ve quit your “regular” job to start your own business. What do you need to draw from your business to meet your personal financial obligations?
Having reasonable expectations about how much starting your own business will cost shouldn’t deter you from starting. Being prepared for the unexpected is well worth the price.