So you have finally decided to take the plunge and plan for that business idea you have been thinking about for a while. As you work through the list of things to consider before you start (aka a Business Plan), there is one vital thing that needs careful consideration and thought to help you understand the viability of your idea. – Financial Planning. And more specifically, Start Up Costs.
When planning for your business it is essential to do that number crunching at the start. The start up costs required for businesses vary massively and depend on many different factors, mainly your type of business.
Here are some typical start up costs to consider when starting up:
Stock – if you are making or selling a product, you may need to buy a supply of stock to help you get going. For retail businesses, more consideration needs to be given to shop stock in order to fill shelves/rails and present a fresh option for returning customers.
Rent: If you require premises for your business you will need to consider the first month (or two months) rent and possibly a deposit and admin fee. You will also have energy bills and additional costs to consider.
Rates: You may be required to pay business rates to the local authority –
Business Insurance: This is arguably one of the most important things to research when starting a business. The type of business you are starting will determine the type and level of insurance needed. Shop round for a range of quotes.
Marketing and Advertising: Give careful consideration to your marketing plan as you start out in business. Where possible (and appropriate) use free tools such as social media to promote yourself. Business cards, websites, leaflets and design can all vary massively in price and the impact of your tools must be considered before spending huge amounts budget on them.
Telephone and Internet: If you are using a separate phone for your business you will need to take into account additional bills/connection fees. This will also apply to internet packages.
Postage: if you run an online business ensure that you factor in your postage costs. Not accounting for postage costs can seriously eat into your profits to it’s important to consider this from the outset.
It is crucial to be realistic about these costs from the outset as underfunding can often be the downfall of new start up businesses.
You may want to start with a ‘wish list’ and work backwards from there and you should always consider when your income from sales will come into the business (Cashflow) as you might need to plan for the first few months costs initially.
A carefully thought out financial plan combined with positive market research indications, can be a great recipe for startup success.
You can find out more information about Business Insurance from a great blog, written by Mitchell Charlesworth