Five Costs That Start-Up Businesses Forget About

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If you’re in the process of setting up a new business – or even thinking about doing so – you need to read this article. Planning a new business is an exciting process, but it’s also full of pitfalls. It’s very easy to get so distracted by the headlines that you miss the small print, and it’s in that small print that problems occur. Sadly, the majority of start-up businesses are doomed to fail within their first year. Yours doesn’t have to, but you need to prepare yourself for the expenses everyone else forgets about if you’re going to survive.

If you know you have the higher costs accounted for, it’s tempting just to disregard the smaller ones and presume you can file them under ‘miscellaneous expenses’ or ‘petty cash.’ You’d be surprised how quickly those unconsidered costs can add up – and the damage they can do. Without planning for the small expenses, you’re gambling with your start-up money. You might as well just take your investment, and stake it all on online slots and their sister sites. If you’re going to do that, you should just open a mobile slots website. The mobile slots industry is one of the few which can be relied on for growth at the moment, so if you have the contacts and the skills, it’s probably one of the best ideas you could have for a new business. We suspect that you have something else in mind for your business, though – so let’s leave the mobile slots to the gamblers and take a closer look at the costs you probably haven’t thought about.

  1. Services From Other Professionals

Unless you’ve opened another business in the past, you probably have no idea how to register and incorporate one properly. Even if you have, it’s a matter that’s probably best handled by an expert. Making a mistake with business registration could be terminal to your business before you even start trading, so it’s not something you should gamble with (as we’ve just covered). If you need legal assistance to set up your company, that’s going to cost money. After that, you’re going to need to engage with an accountant early on to make sure you’re doing the right thing with your taxes. That’s your own tax, the company’s tax, and the tax status of any employees you might have. The more work there is for your accountant, the more it’s going to cost you. Don’t be under any illusions about this – it’s going to cost you thousands of dollars per year. Furthermore, you would also require the assistance of other teams like the digital marketing team. They can help your business reach more people, gain recognition and, well, improve sales over time. This would include a team of designers, marketing analysts, social media managers, data scientists, SEO specialists, and more. Take the example of a PPC Freelancer. A pay-per-click (PPC) advertising is a department wherein the experts of the area closely monitor and optimize campaigns and content to drive competent traffic, increase conversions from potential customers to active customers and deliver measurable results. That is enough grounds to learn the importance of a digital marketing team for any business in the digital-centric times we live in.

  1. Contingencies

Your business model is probably based on selling at least something in your first few months of operation, however small that ‘something’ might be. What if you don’t, though? What if there’s an unforeseen delay with paperwork or licenses, and it keeps you from opening your doors for longer than anticipated? If you’ve already leased offices and employed people, those bills still need paying. What if a key employee hire decides that your business isn’t for them, and leaves within the first few weeks of trading? They’ll need replacing, and their job isn’t being done in the meantime. Running out of money is one of the most common reasons start-up businesses fail. Don’t open the doors until you have at least three months worth of your entire running costs saved up. Ideally, you should have six.

However, some critical resources and assets such as employees, IT systems and facilities, such as electricity and water supply, cannot be disrupted without damage to your operations or reputation, so regularly maintaining and rehearsing your contingency plans are crucial as your business develops. Your business will be more likely to operate without a hitch through flexible and innovative solutions tailored to your needs, supported by expert industry knowledge. For this reason, you’ll need to hire reliable staff, outsource your IT to a managed services provider or hire a competent in-house IT team, and ensure you get your electricity from a reputable provider such as Eclipse Power, or a similar provider operating in your local area. Doing so may be helpful in effectively managing your resources during contingencies.

  1. Technical Support & Web Development

Unless you work in the IT industry, you probably have very little idea about how much computer support usually costs. If you think you can pay someone a few hundred dollars to set up your website, get your email server working and provide on-call assistance, you’ve very wrong. As you know from using computers yourself, systems fail. They need constant monitoring, and support for every hour of every day you’re open. If you factor in the costs of developing a professional-looking website and paying for storage space, on top of all the required maintenance work, you’ll probably spend around $50K in your first year. If that figure is alarming to you, it’s time to look at your whole business plan again. Now, many IT services offer comprehensive packages that include more than just basic setup and maintenance. For instance, a lot of IT companies include cybersecurity for your business alongside it support in Boise, or wherever the company is based. These services can encompass everything from network security to data backup. This ensures that your business’s technological infrastructure is robust and secure. So make sure to shop around and work with the best company for you, potentially ensuring that the investment in it services aligns well with your business needs. This way, you won’t be shocked by the price, but will instead appreciate the value provided by a company that understands and supports your unique requirements.

  1. Office Supplies

Paper. Pens. Staplers. These are trivial costs, but they quickly add up. If you have ten or more employees, they’ll add up faster than you think. The real killer here is printer ink, which is by volume the most expensive liquid in the world. These are just basic supplies as well – people can and will want whiteboards and marker pens. What sort of phones do you have? Will they need headsets? If so, they’ll break constantly and require replacing. Is it cheaper to lease your computers, or will you buy them? If you buy them, how long will they last? Do you need to install Microsoft Office on those computers? If so, do you have any idea how much that’s going to cost? What starts as $10 here and there can quickly turn into $100 here and there, and by the end of the year, you’re wondering where the missing $3000 from your profits has disappeared to. A word of advice: Go paperless unless you absolutely have to work with hard copy documents.

  1. Processing Fees

If only we were still dealing with an economy based on cash. If we were, we wouldn’t feel like we were being robbed every time we took a payment from a credit card. The margins involved in handling those payments can be crippling if you’re working to a tight budget, and you don’t know they’re coming. Some credit cards can charge up to 3% on each transaction you make. That means if you sell something for $3,000, you’re only receiving $2,910 from that sale. $90 might not be enough to make you wince, but one you’ve made ten $3000 sales and lost out on $900, you’ll start to notice. If your business is successful, you’re going to be losing thousands of dollars per year on processing fees, and there’s very little you can do about it. If you haven’t factored this into your projected costs so far, reduce your projected income by 3% and see how much damage it does to the picture.

There are, of course, other fees we could mention. We’re going to assume you’ve already considered the costs of insurance, and a CRM which is fit for purpose. You might have professional or membership fees to take out. You might have licenses to acquire. The bottom line is that every cent you spend has to be accounted for if your business is going to make it through twelve months – otherwise, you may find you have no bottom line at all.



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