There’s a reason why some people call the United States the land of opportunity: it’s one of the best countries in the world to launch a new business. There are over 328 million people in the country, enabling you to capture a large target market.
Also, hundreds of thousands of entrepreneurs start new businesses in the country each year. For example, 225,000 people formed new enterprises in the second quarter of 2020 alone, despite the country being in the midst of the COVID-19 pandemic.
Related Post: 5 Simple Ways to Reduce Your Startup Costs
The statistics are very promising for anyone looking to form a new business. But, as you can imagine, it’s crucial to conduct a lot of research before starting any new enterprise. One area that you should always research is your startup costs.
Some people will undoubtedly pay more startup costs than others as each business is different and has a unique set of requirements. However, some fees are common across all startups serious about creating successful brands that grow each year.
In no particular order, the following are some essential business startup costs that you should keep in mind as part of your calculations, so you don’t end up with any unwanted financial surprises:
It doesn’t matter whether you plan on staying as a sole trader or want to grow your business to the point where you hire an army of employees. What does matter is making sure that your branding is on point.
Branding is essential to any startup business because it’s how potential customers will recognize that organization. The intricate details of a successful branding exercise are beyond the scope of this article. However, there are some basic rules you should follow:
- Don’t use the same name or logo as an existing business;
- Ensure your branding is memorable and stands out from your competition;
- Be consistent with your brand and use the same logo and typeface everywhere.
In an ideal world, you would launch your business, and people would magically know of your existence and spend lots of money with your firm. Unfortunately, it isn’t an ideal world, and you have to tell customers you exist and why they should buy from you instead of elsewhere.
The only way to make that happen and grow your new startup business is by investing some money into marketing. While some marketing can get done for free, you’ll mostly need to spend cash on various online and offline advertising campaigns.
Thankfully, you can decrease your spending and increase your marketing impact by working with a top marketing agency. Marketing experts with a proven track record will help you build your brand and make your business idea sustainable.
Whether you only need a laptop or a building full of machinery, one fact’s for sure: you will need to invest some money in equipment for your business. It makes sense to determine what you need and how much it will cost.
The next question, of course, is working out how you will pay for the equipment you need. You could pay for everything using savings or what you earn from other income. But, for some equipment expenses, leasing items could be a better idea.
Most startup businesses will need a physical base for office space and goods storage. As you might expect, buying commercial or industrial premises can be out of reach for most startups, given their limited startup capital.
However, leasing a property is the better way to keep initial costs down while having the right premises. Be sure to select business premises that fully meet your requirements and are within the scope of your projected monthly expenses.
Also, make sure there are no hidden clauses within your lease agreement, such as landlords demanding you lease the premises for several years.
If your startup business sells physical goods to its customers, you will need to keep some products in stock, ready for fulfilling orders. It can be challenging determining how many products you should have in stock, as you won’t know which ones will be best-sellers.
Some startups will sell high-value products, and they will obviously be wary of keeping several such products in stock due to the high investment required. One option might be to take pre-orders off customers, so you can have a clearer idea of how much stock you need.
Also Read: Tips for Boosting Employee Retention
Irrespective of what your startup sells, you won’t be able to operate unless you have utilities – electricity, gas, and water. Electricity is undoubtedly the one utility that all businesses consume, and if you have premises, you’ll also need gas and water.
It can be hard to calculate how much electricity, gas, and water your new business is likely to consume. You will likely find some examples from other companies that detail how much they consume and what they pay to give you an idea.
7. Office Furniture
Let’s face it: when you have business premises, you can’t expect employees and visitors to sit on the floor. You’ll need to furnish your base with desks, chairs, and even a comfy couch or two for your reception area.
You’ll also need to purchase other items like lighting and even appliances for your kitchen area. The good news is you can easily find out the cost of office furniture online. Plus, there are many ways to keep those costs down.
For example, you could repurpose old furniture that other businesses are throwing away. Or, you might even find people giving away unwanted office furniture on websites like Craigslist. It all depends on whether you want new, used, or free office furniture.
One ongoing expense that all startup businesses need to bear is insurance. As you may know, there are many different types of business insurance products on the market. For example, there’s employer’s liability insurance which you’ll need if you hire staff.
If you have people visiting your premises, you should arrange public liability insurance if they have an accident at your office or factory and sue your business for compensation. There’s also professional indemnity insurance, a must if you provide digital services to your clients.
When you manufacture products that you then sell to customers, it’s crucial to have product liability insurance cover in place. If your products have a manufacturing defect that harms people or causes loss of income, the insurance can protect you against any legal claims.
It’s worth getting quotes for the different policies your business might need and comparing them so you have an idea of the ones that offer the best value for money. Just don’t forget about insurance, as certain types can be a legal requirement for your startup.
When you start a new business, you must register it with the relevant tax authorities in your location. You’ll then need to complete tax returns each year and pay any taxes due on your profit.
Paying your taxes is something you should never avoid doing. You could end up getting fines for not filing your tax returns or paying any taxes you owe. Plus, tax evasion can even get punishable with a jail sentence in certain circumstances.
Keep in mind that there are many ways to reduce your tax liability, so you could end up paying fewer taxes than you think due to factors like tax allowances, allowable expenses, and so forth.
Also Read: Ways to Enhance Your Marketing Strategies
10. Accountancy Services
One person that can help your business keep your tax liability down is an accountant. That’s because they have an almost encyclopedic knowledge of the country’s tax laws and procedures, as it’s something they’ve trained for many years learning.
Of course, accountants don’t provide their services for free, and so you’ll need to include their fees as part of your startup expenses. Accountants can help your startup business with a whole host of things, such as:
- Tax planning;
- Company formation and structure;
- Assist with business strategies and troubleshooting;
- Deal with the personal tax affairs of its founders and chief executives.
If your startup needs to hire some employees, you must legally organize their payroll. That involves paying them each month or week, giving them a written summary of their pay and any deductions made (their payslip), and conforming to all legal payroll guidelines.
You must withhold part of their salary for tax purposes and provide your employees with a detailed account of how much you withheld. There are two ways you can organize your payroll: hire an in-house payroll controller or outsource that to an external company.
In either case, you must account for all payroll expenses as part of your startup and ongoing costs.
One final cost you must account for is your website. Some startups will use their website purely for informational purposes, while others use it as a platform to sell online and accept payments from customers.
It doesn’t matter whether you pay a web designer to create and host your website or whether you do everything yourself using a company like Wix. You must account for your website costs and add them to your startup expenses.