6 Costs to Include in Your Startup Budget
The beginning steps of starting your own business are the most exciting and the most terrifying. You have so many factors to consider, and your brain feels like it is on fire. This is one of the reasons why having a business plan is a crucial first step; this time can really be overwhelming. All business owners have to think about and answer how much money they need to get their business off the ground.
Messing up the step of properly planning your budget can end your dream before it even starts to take off. Owners easily forget to include factors into their seed money that land them into the negatives. You are going to have large, one-time costs, along with a multitude of monthly, ongoing costs. Your startup budget should include only the things that are deemed essential, not the optional features.
When you start your plan, you need to divide all of your expected expenses into two categories: fixed and variable. Using a worksheet is the best way to plan out these costs. The type of business you are beginning is also going to determine the costs. An online business will have different costs than a brick and mortar store. A bookstore has different factors than an ice cream shop. Let’s take a look at some of the costs you need to have on your plan, despite the type of business you run.
1. License, Permit Fees, and Insurance
It is wise for all businesses to have a variety of insurances. If you have a brick and mortar business, you need property insurance. Business insurance can help protect you from liability as well as situations such as data theft.
Most businesses need some sort of licenses and permits. You may need a permit that is industry specific. More than likely, your business needs to undergo health inspections and authorizations. These types of costs are standard for all businesses.
2. Equipment and Supplies
These costs are going to depend on the type of equipment you need for your business. A restaurant is going to need multiple pieces of equipment for the kitchen, as well as dishes, silverware, cups, and a whole slew of items.
All businesses need basic supplies; they just differ depending on the type of business. However, most need basic paper products, like toilet paper, and things such as paper, pens, printing ink, and other office supplies.
3. Rent or Mortgage
Most startup companies don’t opt to purchase a space immediately. Looking for an office building for rent is generally one of the first steps. Leasing may cost more money monthly, but if you plan to grow, you may run out of space quicker than anticipated. Also, co-working spaces for rent typically includes the cost of daily maintenance.
4. Marketing
Without marketing, no one is going to know your business even exists. A company doesn’t advertise itself. You don’t have to start off with elaborate marketing campaigns, but you should factor in paying an external company. Typically, you need the knowledge of a marketing company to attract customers to your business. It is money well spent.
5. Employee Expenses
If you plan to hire employees, you must factor in wages, salaries, and benefits (if you plan to offer). While benefits do cost you more money, you are unlike to get qualified employees without them. You need to compensate your employees well to keep them happy and to stop them from searching out better opportunities.
6. Technology
Hardly any businesses succeed in today’s market without technology. You need to include the cost of running a website, information systems and software (such as payroll), and more. You may also want to include the monthly cost to have the internet at your location and phone service.
Make sure you don’t forget costs such as utilities into your budget as well. Success is in the details, so plan the best you can.
