Starting a business can be an expensive venture, especially if you’re not fully prepared for the task. While there are many obvious upfront costs that come with getting set up, there are just as many hidden startup costs that can hit hard if you’re not prepared for them. With that in mind, we’ve compiled this list of startup costs that many entrepreneurs forget so you’re not stung by them when you least expect it.
Insurance
One of the most commonly overlooked costs of starting a business is the list of insurance policies you’ll need to ensure every aspect of your business is covered. Things like public liability and small business workers compensation insurance are good places to start. However, you’ll need to look into the specific coverage your business needs, as each situation is unique.
Office Space
Office space is something that can be easily forgotten, especially if you’ll be operating remotely or from a warehouse. Even if you’re a mobile tradesperson, your admin, marketing, and customer service staff will require a quiet and comfortable space to complete their work efficiently.
A good way to keep costs low while still presenting a professional image is to make use of a coworking space. These office buildings are generally situated in prime locations, giving tenants flexibility and a premium address without the insane rent that traditional corporate buildings charge.
You can also consider converting part of your home or warehouse to function as office space. However, this will generally require landlord approval unless you own the building. You’ll also have to spend time and money fitting out your office. Spend that money on a coworking space instead, and you can enjoy the fitness center, meeting rooms, admin support, and other features most of these buildings offer.
Freight and Associated Costs
If you’re selling products, it’s crucial to consider how you’ll get them to your customers. Many new business owners default to their local postage service, but as you begin to grow, this can quickly become prohibitively expensive and unreliable.
Instead, it is worth investing in a partnership with a third-party fulfillment center to ensure all your packing and shipping needs are met to a high standard. In doing so, you’ll reduce overall postage costs while ensuring your service is far more reliable for your customers.
Advanced IT
You’ll need a phone and laptop to get most businesses off the ground, but many entrepreneurs forget the more advanced IT support they’ll need. At a minimum, we suggest having a good enterprise backup and disaster recovery system and quality virus protection. However, your company may require extra support depending on how you operate. So, look into affordable IT outsourcing in your area.
Retirement Planning
Finally, you must consider how you’ll contribute to your retirement fund. As a general rule, it’s a good idea to contribute at least 10% of your income to a retirement fund. However, increasing your contributions will allow you to take advantage of compounding interest. Depending on your account type, these extra contributions may also help reduce your tax bill, thanks to the tax breaks available on any income contributed to retirement accounts.
Starting a business is a prime example of the saying, “you have to spend money to make money,” but that doesn’t mean you should go into it blind and just accept whatever costs come your way. If you plan things carefully and calculate what you’ll have to pay out, you can plan accordingly and ensure you get the best deal. Hopefully, this article helps.
