Starting a business should be one of the most exciting times of your life. There are endless possibilities ahead of you and success is within reach. You might have scared yourself with a few Google searches into the likelihood of your small start-up succeeding, the simple truth is that most failed businesses only fail because they were never properly planned. You need a thorough business plan with detailed costings to ensure that you have adequately funded your new company. Here are five costs to factor in that are vital to starting a business:
Equipment costs can run into the millions, depending on the size of your business. Smaller start-ups generally have an equipment cost of around 30 to 40 percent of their total budget. Computer equipment, office equipment, and shopfitting cost all fall under this category. Your equipment budget will be the bulk of your business loan.
Your business will never take off if you haven’t set aside a decent budget for marketing. Marketing costs can run into the millions, just like equipment costs. Your marketing budget should be 10 to 15 percent of your projected annual income – please note income and not profit. Marketing costs include things like company signage, advertising, digital marketing, Facebook ads and so on. Your marketing plan should include omnichannel marketing strategies like radio ads, social media ads, and magazine or newspaper ads.
- Insurance and Legal Fees
Your retail start-up must have insurance and you need to budget for potential legal costs resulting from slip and fall incidents in your shop. If your customer slips and falls while shopping in your store they are entitled to contact Polito Law for more information regarding possible settlement amounts. You can cover yourself and your business by ensuring you have the required business insurance and coverage amounts.
Your inventory costs will account for 25 percent of your operating budget, but this is a necessary cost – without inventory you cannot make money. When you just starting, this percentage is a lot higher to get your business off the ground and ensure that customer satisfaction. If your customer tries to buy something from you, only to find out that you do not have that item in stock, they will be unlikely to return or to recommend your business to their friends and family.
Utility charges are a necessary business expense, these include things like power, water, gas, heating, internet, and telephone lines. You will learn how to estimate these costs over time but in the beginning, you will need to calculate them individually and then get your total from there. Making a profit as a small business takes time, money, and effort. The average cost of business utilities in America is around $3 per square foot for energy costs alone. There are clever ways that you can reduce these business costs. If you are working from home, then these costs will be significantly less.