START UP COSTS FOR A BUSINESS: BUSINESS START UP COSTS
Are you a business owner? Are you trying to start up a business? Or do you work with a business organization?. Have you been wondering on how to start up your own business?
It is true that starting a business is not easy. Yeah!
But with the right plans and preparations it can become simple and easy for you.
In this article we will be discussing and sharing with you on business start up costs: start up costs for business.
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The question is,
What are start up costs?
Startup costs are the expenses incurred in the process of starting a new business, including the running costs in the early stage of the business. Startup costs should be outlined in detail in your business plan, this is because, business plan is absolutely essential to launching a business, and writing one should be one of your very first steps in starting a business.
If you are thinking of starting a business, you must ensure that you.
• Start small: don’t always aim high. Start small and end big
• Estimate the cost of starting the business and the expenses in running the Business and the starting stage.
• Understand and compare the type of cost that you will have whether fixed cost, variable cost, one-time cost, ongoing cost, essential or optional cost.
• Project your cash flow and know your financing method.
After considering these factors then you can now move over to the start up costs for a business.
What are the start up costs for a business?
What is the cost for starting a business?.
Below is a detailed explanation on the start up costs for a business. You must consider these if you really want to start up a personal business so that you will not end up crashing.
1. WRITING YOUR BUSINESS PLAN:
Before you go into any other step of Publishing your business to become visible, this is a vital part of business start up.
It is among the start up costs for a business and the first on the list because, it is the business plan that will determine the start up costs for a business, and for any business at all except you don’t have plans for your business.
A business plan is really essential to the startup effort because, it is a detailed map of the new business. It is a business plan that will tell consideration of the different startup costs.
Also, a business plan helps to underestimate expenses falsely increases expected net profit, a situation that does not bode well for any small business owner at all.
So the first step is to draft a business plan. You can write it by yourself or hire n expert to help you do that.
An expert can charge you between $30 to $100 depending on the length and features of the business plan and how you want it to look like.
2. RESEARCH AND PROFESSIONAL CONSULTANTS EXPENSES:
Making reasearch is a compulsory factor to be considered in start up costs for a business. This is because, it is these research that will enable you plan your business very well.
Though this is optional yet it is very important and must be considered. In fact, some business owners hire market research firms to help them assess the industry and market before starting their business.
On your own, you can save money by doing this step on your own, but if you hire a research firm, include this cost in your business plan too.
It is important for careful research of the industry and consumer makeup to be conducted before starting a business.
This is another of the start up costs for a business. You must consider the equipments that you want to use in running the business.
The exact equipment and supplies you’ll need will depend on your specific business. In your business plan, you should ensure that you outline a general list of all the equipment and supplies you think you’ll need for your business and whether you plan to lease or buy them.
Your business will either need to finance equipment immediately or sooner after starting.
Equipment in start ups can costs for range anywhere from $5,000 to $130,000, depending on the industry, the kind of business, the budget and or the size of the company.
If you want to start a business even if it’s a hair stylist, a fashion designer, a car mechanic or any kind of business, whether big or small, you must finance the equipments that you will use for your business.
And these equipments costs range according to your industry and the size of your business and budget. Hiring employees will incur additional costs, as you may need to secure individual equipment, as well but it worth it if you can’tdo it yourself.
4. BUSINESS OR OFFICE SPACE AND FURNITURES:
Your business or office space is a compulsory start up cost for a business.
It can be an office or retail space which will be a sizeable portion of your fixed costs, whether you rent or buy.
This costo Business or office space can range from $80 to $1000 for each employee permonth. And, it will depend on the type of space you’re using or you want to use.
On the other side, if you work from home, then you can mitigate these costs or look into coworking spaces . They are both ideal for smaller businesses.
But if you are into rendering of services, then you can travel directly to clients to further decrease overhead costs for you.
5. TECHNOLOGY AND INVENTORY:
The technological expenses has to do with the expenses on technology and internet. This includes the cost of a website, information systems, and software, recording systems, including accounting and point of sale (POS) software, and other technological devices for running the business.
Inventory on the other hand, if you’re in the retail, wholesale, manufacturing, or distribution sector, you’ll likely need to secure inventory to sell, as soon as you possibly can.
Although for you to know how much inventory to carry can be tricky: If you have too much inventory, you risk spoilage or damage. If you have too little, you risk losing customers who won’t wait for items on backorder. This is especially true for seasonal businesses where inventory can vary drastically year-round.
Inventory will cost you about 17% to 25% of your budget depending on your industry.
You should consider to secure more inventories when starting your business.
6. MARKETING AND PROMOTIONS:
Marketing is the aspect of start up costs for a business to be considered as it is the area that will help your business get to a large audience thereby bringing more clients to your industry.
The Marketing of a business costs between 0% to 10% of your total budget.
Promoting and marketing your business is what will drive in clients or Customers. Marketing can include materials like banners or posters, fliers, signs, business cards, video adverts, giveaways, paid ads and so on.
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Marketing costs include all of your advertising and promotion costs, plus whatever you spend creating a marketing strategy for your business. You may choose to create a strategy on your own or hire a marketing company to help you do it.
You could do physical Marketing or online marketing. Online Marketing can be done on any social media platform at all. But the best ads Platform to get more traffic and clients is on Google ads and Facebook or Instagram ads. But you can also get high audience with Whatsapp Marketing.
You should consider these costs when planning the start up costs for a business or industry.
Marketing tips to read; MARKETING
7. INSURANCE COSTS:
For the safety of your industry and your staffs, you must sign up or register with an insurance company.
Insurance will cost you an average of around $1,000 to $1,500 per year.
You need to insure your business because, it needs the same protections you provide to your health, home, car and other properties.
There are many different kinds of business insurance, examples are, protection from customers that file a lawsuit against you and disaster insurance for potential fires that can shut down your restaurant for weeks.
You have to choose the kind of insurance you want for your business depending on on the kind of business or industry you are into and your budget.
8. TAXES AND INCORPORATION FES:
As a business owner or Entrepreneur, you need to pay your business or company tax.
So when planning the start up costs for a business, you should consider the tax. The tax varies based on your resident country or location and your revenue too.
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Currently, under federal law, corporations pay a flat 21% corporate income tax. But Pass-through entities can claim a 20% deduction on income before paying their business taxes, this is common.
Also, If you decide to incorporate your business or form a limited liability company, you’ll need to file articles of incorporation or articles of organization, respectively, with your stateor country.
The incorporation fee is under $300 in the majority of states.
9. PAYROLL FOR EMPLOYEES:
As long as you own a business and have employees working under you, you need to pay your employees.
The payroll will cost you between 25% to 50% of your total budget for your business.
Hence, this must be out in consideration and properly planned when starting a business.
10. TRAVEL AND BILLING:
Traveling is not actually compulsory in start up costs for a business if your business does not require you traveling or shipping the goods directly to your customers.
But if you have a consulting business or you visit your customers directly, you will be traveling a lot. You’ll need to factor in the price of transportation, food, and lodging — multiply these costs if you have multiple employees traveling.
Or if you are into physical rendering of services, then you will have to consider the cost of traveling to meet your clients to render your service.
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These are the various start up costs for a business. Irrespective of the kind of business you are into or that you wish to start, you must consider these start up costs for a business as they will help you in writing your business plan and starting you Business, running it smoothly and growing it without quitting (CONSISTENCY).
Every business owner wants to always make sales and grow but as a result of lack of proper planning most of them has failed.
You can escape that fate by taking proper planning using the above factors or start up costs for a business or industry.
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