Deciding to open a business can be exciting, but it can also be exhausting as an entrepreneur. When you have the responsibility of calculating the business startup costs, worrying about the long-term profit, and ensuring startup finding can be very stressful for you.
But the question is, what are startup costs? This question is very critical because the initial investment can be very significant for the long-term growth of your business. According to Kaufman Foundations, the average startup cost is $30,000, which increases each year. Regardless of your eCommerce marketing strategy, you must have proper planning for the complete estimates of the costs for your business startup.
How to Calculate the Costs of Commencing a Business
If you can draft a business plan, it is the most ideal way of estimating your business startup costs. In your business startup plan, the financial projections section will provide you with an estimate of revenue, profit, and expenses for the next five years.
There are many templates to estimate your finances properly. They enable you to estimate your initial investment costs, so you would know about the money you should borrow to kick start your startup funding.
For example, if you are looking to start a business in a rich country like Australia, you must think about certain costs annually. The costs include
- Rent
- Office supplies
- Payroll
- Incorporation fee/office furniture (one-time costs)
When you calculate the costs for a startup business, an effective thumb rule will allow you to cover half a year of your expenses upfront. Therefore, you should not rely on your business revenue to ease your costs until you are done with the earlier period. You will need assurance to make you place your feet under the table before you can attract other respective businesses.
Business Startup Cost Ideas to Consider
Even though this is a list of costs for a typical business startup, your expenses will depend on your industry and the type of business.
1. Equipment
We don’t think many businesses in the world do not require immediate finance equipment. The equipment startup costs can range from $10,000 to $125,000, based on the industry and type of business.
For example, if you own a shipping company or have started a shipping business, you will need to finance a truck as part of your shipping policy. If you own a restaurant, you would require high-quality ovens, stoves, utensils, and dishware.
Commonly, every business requires an operating system. Of course, these costs range depending on your industry and business dimensions. If you integrate employees into your working plans, it will increase additional costs on your business startup as you may require to buy individual equipment as well.
2. Incorporation expenses
One of the first things that you do while setting up a business is to select a business entity, which has financial and legal implications. If you are incorporating your business or creating a limited liability company, you will require the filing of articles of organization, with your state respectively. The filing of an organization's articles can range from $50 to $725, based on the state. However, the allotted fee is under $300 in most of the states.
Even if you decide not to incorporate your business, you will need to apply for federal or state licensing. The documents that you require are based on your industry and office location. For example, if your business belongs to the agricultural sector, you will need federal licensing. Service-based offices may require licenses associated with trade. Retail companies may require sales tax licenses and permits.
3. Office space
Regardless of your decision to rent or buy, opting for an office space or a retail space will contain a sizable portion of your startup costs for a business startup. The investment in the employees ranges from $100 per employee per month to $1000 per employee per month. Once again, it will depend on the industry and the office that you are working in.
Image taken from Strikingly User’s Website
You can minimize these expenses if you work remotely in the beginning, or prioritize coworking spaces, which is ideal for small businesses as well. If you own a service-based business, you can move directly to your clients to minimize your overhead costs even further.
4. Marketing
For marketing, you may look into the physical materials, such as signs, banners, and business cards. You may also require paid advertisements along with creative options, such as giveaways or promotional videos, which may require you to hire a consultant or a video editor.
5. Website
When you build a business website, make it professional and unique. Your website must be easy to navigate, and it must contain all the displayed information about your services, products, subscription plans, and contact information.
Image taken from Strikingly
Fortunately for you, Strikingly has made creating websites look easy and cost-effective. Our content management plans are unique to correspond with your business startup costs, but they come in a variety of subscription costs. Below, we have mentioned the annual subscription plan.
- Limited: $96 per year
- Pro: $192 per year
- VIP: $588 per year
Strikingly provides basic website builders. If you are not associated with technology, you can build a website through one of our services despite not having a coding background. If you do not know how to use a computer, you may need to hire a trustworthy partner to build a business website. However, you must know that this itself is an additional cost. Apart from the annual subscription plan, you can also check out our monthly, 2-year, and 5-year subscription plans. The variety of our subscription plans will coincide with the demands of the startup costs for your business.
6. Professional consultants
It is tempting to look after your business plan by yourself. After all, who knows about your business startup more than you? There are many DIY websites to help you. However, interaction and collaboration with professionals and experts can be worth the investment in your overall business startup costs.
Image taken from Strikingly User’s Website
For example, if you hire public accountants, they will help you in understanding different legal structures, select an appropriate employee benefit initiative, and ensure that you are committed to your tasks as an employer. When the tax season comes, they will look for the tax returns and help you save money on taxes.
It is unnecessary to appoint a full-time accountant. However, it can be assured to communicate with them on a daily, monthly, or yearly basis to analyze the financial aspect of your business startup. If you take advice from an attorney, it will allow you to not make legal mistakes, such as not trademarking your logo or creating relationships with vendors with no contract.
7. Shipping
If you own a service-based business, you can stop reading at this point. However, if you are in retail, you can ship products to your respective customers. You can look into retail fulfillment methods, such as dropshipping, through which you can sell things without stocking up inventory.
Image taken from Strikingly User’s Website
You would require a factor shipping into your startup costs, such as packing materials and postage. Depending on the products that you send, these costs can reach thousands of dollars. You can look into numerous marketing services to ease the burden of shipping costs on the respective small business owners. With these services, you will be eligible to print postage without requiring you to buy an expensive postage meter. If it is possible, you can create cost-effective shipping boxes from your chosen shipping service.
Ways of Saving on Costs for a Startup
The business startup costs can add up, with some aspects of it being non-negotiable. Do you do some research before opting for high-ticket prices, and realize that there are ways to take care of these business startup expenses?
Image taken from Strikingly
For example, some software enables an entrepreneur to save costs of hiring a professional bookkeeper. Working from home is an effective way of reducing office space. Leveraging social media can also impact your marketing expenses.
Some costs are worth the investment. You shouldn’t compromise on the quality of the equipment just because it is cheap. You will lose time and money just to get it fixed before deciding to upgrade on it. If you are confused, you must hire an accounting professional and ensure that your business websites and social media campaigns are up and running.
Conclusion
If you are an entrepreneur, you would know that planning a marketing budget is one of the most arduous tasks out there. However, you can go a long way with your company or business if you take care of your business startup costs. You must know the money you should borrow before looking into other things. The reason is that the financial restrictions are something that you must get done with ensuring the proficient running of your company.
One of the key startup expenses you must consider is the website. You should have a website corresponding to your startup business. Strikingly is a platform that enables you to give an identity to your brand. We share many website templates on which you can do more than just add content. You can customize our website templates by trying out different layouts, color schemes, and brand fonts. Strikingly allows you to integrate different color schemes or fonts that can coincide with your business startup brand.
