A lot of people have great business ideas every day. But there’s a good reason why so few of them ever make it to the next stage: money.
Of course, there are plenty of businesses that you can start with less than $500. For domestic cleaning, dog walking, and some online business models, you just need to invest your time to make them happen.
But most ideas are a lot more complicated. And the more complicated your idea, the more it’s going to cost you to set up. In today’s guide, I’m going to go through some of those with you as we confront the costs of starting a business.
#1 Licenses, Permits, Legal Fees
Setting up a business costs you before you even start work. In many trades and industries, you will need a permit – and maybe a state license. You will also need to work out your company’s legal identity.
Are you a partnership or a limited company? You will need a lawyer to outline your structure and ensure you are complying with the law.
I recently did this back a few years ago and the process is actually fairly straight forward. In some cases you can do it yourself if your setting a small business but if you’re setting up a bigger business then you may want to consider looking into a knowledgeable lawyer.
#2 Employees and Contractors
If your business idea is complicated, it will take more than you alone to get going. And, hiring people full time is one of the biggest expenses you can get.
At this early stage, it might be worth looking at finding contractors and outsourcing instead. While there is still a cost involved, it will be less in the long-term as you only pay for the work you need doing.
In may case I have several employees who work for me and help me run the day to day operations. Employee cost can get expensive when you start looking at full time workers.
Things that come along with a full staff might be vacation time, sick leave, insurance, and even workman’s comp.
#3 Office rental and Furnishings
The second you start renting an office, it’s going to be hugely expensive. And there’s also filling that space with the right furnishings and equipment.
According to Arnold’s Office Furniture, there is plenty to consider. You will almost certainly need work desks for every employee – and chairs.
But you also need to think about furnishing meeting rooms, kitchens, bathroom facilities and a lot more. And that’s not even starting to mention the cost of your equipment.
Computers, telephones, fax machines – all are essential. In fact, moving into an unfurnished office can easily set you back up to $5,000 without even trying hard.
#4 Cost of Operations
Everything you do in business costs money. From turning on the lights in the morning to sending a marketing email – it all has an associated cost.
It is vital that you lay out everything that is going to be an expense and account for it. Doing so will give you the opportunity to start identifying more efficient ways of doing things. And, it will be the foundation for improving your bottom line and reducing your costs of sale.
Some of my biggest overhead expenses include electric to buying ink for the copy machines.
#5 Subscriptions, Associations, and Memberships
Being part of a trade organization is worthwhile for networking. So, it’s another cost you have to contemplate.
You will also need to keep up to speed with developments in your industry’s trade magazine subscriptions are also necessary. It doesn’t end there, either.
There will be conferences and trade shows to attend, as well as more localized events with other business leaders in your community. All of them will require you to dip into your profits.
So what kind of cost are you dealing with when it comes to starting your business? If you’re like me their is always something you did consider before you started. However this is why you need to be prepared for these things and have a plan in place when this kind of situation comes about.
Good luck with the new business idea!