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Don’t Be Caught Out By Costs: Expenses That Trip Up New Entrepreneurs

We all know that setting up a business isn’t cheap, but it’s not until you sit and break it down that you realise just how expensive it can get. While some of these can sound like common knowledge, they’ve caught out many new entrepreneurs and they won’t be the last. Getting your costs wrong means your venture can fail before it’s even begun. Most businesses know that they won’t be earning a fortune in the beginning (breaking even and small losses are pretty normal) but without proper planning you’ll be instantly in the red to the point that it will be really difficult to catch back up. Here are some costs to consider, add them up carefully before setting up your business.

Website

Your website is absolutely crucial to your success as a business. Even if you don’t sell products directly from your site, you need to be visible online. Customers will be searching for businesses like yours, and if you don’t show up at all, they’re always going to find a similar company which of course will be one of your competitors. There are millions of websites online, and so if you’re not in the know it’s easy to assume that having one created will be inexpensive. You might even be considering using a website builder, there are enough of them out there and it must be easy, right? However, it’s always always worth spending the right money on your site; get this wrong and you could be putting off customers at the very first hurdle. Find an experienced web designer, ideally, someone that specialises in the kind of business you’re setting up. For example, if you’re a lawyer, solicitor or other legal company then someone specialising in attorney website design would make good sense. See the money spent as an investment- it really could mean make or break for your business.

App

You’ve spent a ton of money on a great website and design and it’s perfectly optimised for all devices. That’s all you need, right? Unfortunately, you work isn’t done. While an app isn’t strictly essential, it can be massively beneficial for business. Research shows that more people now shop using phones and tablets compared with laptops and computers, and they prefer to use set apps rather than their device browsers. Apps are more secure, they give you a professional edge, and in the not too distant future will be as essential to business as a website is now. Get ahead of your competition and invest in a responsive and interesting app. In some cases, your website designer may also be able to build you an app. In other cases, you’ll have to find an app designer too.

Marketing

Are you under the impression that ‘if you build it, they will come?’ If so, you couldn’t be more wrong and your naivety could well end up being the downfall of your entire venture. The internet is absolutely saturated with business, many being just like yours. To be found by the right customers you need to find a way to get out there and reach them, to rank highly for the keywords people are searching for in relation to your business, and ads are shown the customers that are most likely to be interested in you. Without the right marketing, you could be selling the best products in the world that people genuinely want, but won’t be making any sales simply as they’re unable to find you or know that you exist. Marketing isn’t cheap unfortunately, but it’s essential to set aside a budget just for this if you want to be a success.

Hiring employees

Hiring employees can be much more costly and time consuming than you might realise. You have the cost of running the ad for the job vacancies, the time and cost involved in sorting through CVs, and then with interviewing. Once you find a potential candidate you will need to cover the cost of running background checks and checking references which again take time (and time is money!) Once you’ve found and hired a candidate, you’ll need to pay for their training, not to mention the equipment they’ll need to actually do their job. To keep your employees you’ll need to treat them well, fair wages and good employee benefits are two ways to do this. Things like medical, dental and retirement plans all help your workers to feel secure, and prevents them from leaving to work elsewhere. Which is good, as if someone leaves then you have to go through the recruiting and those costs all over again.

Outsourcing

You might think that hiring staff is too expensive in the beginning, and so outsourcing is your best option. But while outsourcing is great in many cases, there are costs to consider here too. It will always cost you more overall to have your work done through a third party company, although you do get to avoid many of the upfront costs involved in setting up alone. If you want to outsource entire departments or large projects, you’ll need to find a company who’s able to handle the workload, and who you’re happy will do a good job. This might involve attending trade shows and generally doing a lot of research to find the right company, which of course involves time and money.

Licenses and insurances

There are lots of legal hoops you have to jump through when you’re setting up a business. You’ll need licenses for everything from playing music in your shop to putting a sign out the front. There are tons of really small things that require the right license or you risk getting fined that you’d probably not considered at all. They’re not difficult to obtain, and most aren’t too expensive either. However, if you need a lot of them the costs can add up, and in many cases it’s something you’ll need to renew each year. Insurances are just as important, you’ll need public and employee liability insurance at the very least, so that if someone is hurt on or as a result of your business, you wont end up out of pocket.

Equipment purchase

One of the biggest expenses of setting up a new business is the cost of equipment. Depending on what you do, this could be shop shelving units and a till, it could be desks, chairs and computers, it could be vehicles, machines or anything in between. Chances are you’ll be aware that this will be expensive, but you might not know just how much the costs can add up. One way to get around this would be to hire things initially, then later on when you’re earning a profit you can purchase them for yourself. This enables you to get started withouth a huge budget, but saves you from wasting money on hire later down the line when you no longer need to.

Premises running costs

You know that there will be costs involved in hiring commercial premises, but the running cost can mount up too. Just to open your doors each day means you need to earn a certain amount of money to ensure you’re not making a loss. From paying staff to paying the bills, it can be more expensive than you think. Make sure you plan ahead and work out what your daily outgoings are going to be, so you can ensure you’re making enough to at least break even in the beginning.

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