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.
