As an entrepreneur or new business owner, you have to be able to cover your costs. Even if you’re not yet making a profit, you need money in the bank to pay for the various costs of simply having a business up and running. This is one of the main reasons why not just anyone can simply start a business. You need resources whether you like it or not.
Most entrepreneurs are aware of this need for capital before starting their venture. This is why financial backers abound, whether they are financial and banking institutions, venture capitalists, angel investors or crowdfunding platforms. You can find the money you need if your idea is good enough and you have a plan. You need to present all the costs your idea will incur if it were to be set up. Because, while your capital will be allocated to your startup costs predominantly, you will also need to have some money in the bank for the first few months’ bills as you’re unlikely to be turning a major profit so early in the game. And in order to know how much money you need as well as how to make use of the funds you do acquire, you need to know what your costs are likely to be.
Here are some of the things to consider as costs for an up and running business.
Rent and utilities
You will need a place to work from. Now whether you make use of your own personal space or you decide to rent out a space, there are costs involved. And should you be working from your kitchen counter in the beginning, it’s still wise to figure out how much office space will eventually cost you. Because you will move from your kitchen counter, it’s inevitable. But deciding on the type of office space you’ll eventually need means deciding how many people you envisage employing in the foreseeable future. You’ll need to account for all the costs involved in this space. The infrastructure set up will play a role, but from the outset you must know the cost of the rental plus the utilities you’ll be billed every month.
Business licenses and permits
what licenses and permits you’ll need depends on the type of business you plan on running. And each industry differs, each sector has their own set of rules by which you’ll need to abide or you run the risk of having to pay a fine. You can speak with your financial advisor about these permits and their costs and your local municipality about what paperwork is needed for you to legally operate.
In the beginning, many new business owners believe that word of mouth is enough marketing to start. But this is not always the best idea. You want to spend some time marketing your business online, especially on social media. And you’ll need a website so that you have an authoritative online presence. What’s more, online marketing activities don’t cost a lot of money but in order to really optimise your presence, you’ll need a constant internet connection. Your prepaid dongle is simply not going to cut it. Set some budget aside for the marketing plan you’ve put together. If you are going to pay Facebook to advertise your company, then have an idea of the costs involved beforehand so you know what is necessary for the monthly boost. And, no matter your marketing strategy, you need to have the funds available for consistent marketing or your strategy will fail.
Not having insurance is so risky in the business world. You need to be protected from losing all of your capital, infrastructure and assets. You can lose these things in the event of criminal activity, natural disaster, neglect or if someone sues you. Of course, these all sound like major disasters but if they occur and you haven’t insured your business, you run the risk of suffering complete financial ruin. Insurance is a bitter pill to swallow as you’re paying for something you may never use, but it’s a real must-have. If you are concerned about the costs involved then sit down with a broker so you can find the most suitable service provider for your specific needs.
Source: The Cradle