Small business start up costs
If you're thinking about starting a small business, you probably know that you'll have to spend money upfront to get your business up and running.
While the amount spent in the beginning differs depending on the type of business you start (a small business that can be run from home, for example, will be considerably less expensive than one that requires an office or store), but as a general rule, the following are some of the most common start-up costs.
Licenses and permits
The money you spend on licensing and permits depends on the type of business you are running, what professional permits are required (for example, food handler's permits if you are preparing food; professional permits if you are going to be doing hair or nails)as well as the fees charged by your local, state, and federal agencies. The overall amount you will pay will vary from state to state, as each state has different requirements.
Many small businesses opt to get legal advice when it comes to starting up a business; for example, if you are forming an LLC or a corporation, fees you pay an accountant for payroll and tax help in the beginning, and so forth. You should have money budgeted for these fees as well.
If you are operating your business out of your home, this will most likely not be an issue. However, if you are running your business from a store or you need expensive equipment you can't buy, you should have enough money to pay for a few months' rent or lease payments for special equipment required to operate your small business.
If you are selling products (as opposed to services) this will most likely be your most significant start-up cost. You should have enough inventory to last you several months, and you should check with your suppliers to make sure you have enough inventory to meet their requirements as your supplier. You will also want to factor in product development as well; that is, the money you spend perfecting your product before you market it.
Advertising and marketing
You should also set aside money for your beginning advertising and marketing expenses. This includes brochures, business cards, letter head, and website development. In addition, you may want to advertise by announcing a grand opening on the radio, putting flyers in mailboxes, and so forth, depending on your budget.
Regardless of the type of business you are running, you will most likely need at least one computer, printer, fax machine, and telephone system. If you have an office and employees, the start-up costs for this type of equipment will be much more. However, if you have a lot of equipment you need, many companies will go ahead and rent it to you.
Many overlook it, but it's also important that you have cash in your cash register if you operate one. You never want to be caught without cash!
As with anything, in a small business, miscellaneous expenses will often come up. You should budget between 10 and 15% of you overall budget for these miscellaneous or unexpected expenditures that are sure to pop up.
Starting up a business, no matter how big or small, will require money. The above are a few of the costs you can expect to start your small business.