Starting a new business usually springs from passion. However, you quickly learn that you need to spend money to make money. When you’re starting out though, the costs can quickly feel like they are getting out of hand if you aren’t prepared for them.
Here are the most commonly overlooked costs of starting a new business. Budget for them from the beginning, and hopefully you’ll feel more in control.
1. Market research costs
When you’re fired up with an idea you don’t necessarily think of the importance of market research, but it is vital for success. Market research is the way to validate the potential of your idea, demonstrate that there is a viable market, and know who you’re competing against.
Whilst there is some scope for doing much of this work yourself, you may discover that you need to use paid surveys or get an expert on the case.
It can take a little investigation to work out what insurance you actually need. The next step is to work out the cover amounts and coverage. Consider things such as public liability insurance. You’ll also need to consider whether you as an individual now need different insurances, such as life insurance or critical cover. Depending on the nature of your business you may also need industry-specific ones.
3. Website costs
In the digital age it is near impossible to run a viable and successful business without a fit-for-purpose website. It can be difficult to quantify how much this will cost at the start-up stage. You need to factor in not just the website design and creation, but also factors such as ecommerce costs and SEO costs. Don’t forget that you’ll also need to take in to account cybersecurity costs too.
4. Product or service development costs
Having an excellent idea or concept is one thing. Getting it to market is another entirely. You may need to invest in design experts, or incur manufacturing costs. For service businesses these costs may be different but they will still be there, such as networking and training costs.
Few businesses can bootstrap, or take off with minimal investment. A common way of getting the money needed is to borrow, often in the form of a business bank loan. Remember that this money ‘costs’, and you need to factor in interest rates to get a true picture of what you need to pay back.
6. Legal costs
Depending on the type of business structure you will be using, there could well be legal costs associated with starting up. For example, you may need to draft shareholder agreements, or director documents. Whilst these costs can mount up, it is worth investing in getting these elements of the set-up done accurately as they could well save money, time and effort down the road.
If you’ve got a great idea, product or even name then you will want to protect it from being copied. The way to do this is, usually, through getting a trademark but be aware that there are costs associated with this. The amounts vary according to the protection type you need, but do factor these in from the start.
What costs came as a surprise to you when you started your business?