Launching and operating a small business can be exhilarating. However, for first-time entrepreneurs or business managers, that thrill often coincides with fear or anxiety that the venture will fail. For example, you may be worried about financial burdens, the overall profitability of the business in the long run, or the amount of money you’re supposed to spend to ensure that your business starts on the right foot. Suppose you are unfamiliar with small business startup costs; this article focuses on the top six small business expenses you must budget for.
1. Market research expenses
Before you launch your small business, you must conduct intensive market research about your desired industry. As much as there are startups that ignore this step, there is a good chance such businesses find it challenging to execute their business plans. For this reason, it is recommended to collaborate with a market research firm or expert to help you gain an in-depth understanding of your target market. Remember, you will have to pay these experts, and you must include such costs in your business budget.
2. Office space, equipment, and supplies
Regardless of whether you plan to buy or rent a business location, it will be fairly costly. This is the main reason most small business owners choose to operate their new ventures from their homes to cut operational expenses. If you must get locked into a long-term lease, there is a chance you will be paying a considerable amount of cash. Besides, you must factor in utilities and other related operational expenses. Even when you can afford an expensive lease, you will need to handle various tasks such as designing an office layout, negotiating the lease, purchasing office furniture, and setting up your office equipment.
Depending on the terms of the lease, you may be required to start paying for the rent before you launch your business. That means you’ll be asked to put down a specific amount of money for a security deposit and pay rent before opening your business. Such costs must be considered as small business startup costs and must be included in your business budget.
Keep in mind that office supplies can quickly add up. Some of these expenses include water coolers, filing cabinets, office desks, computers, chairs, microwave, coffee maker, office phones, and more. In addition, it would be best if you did not also overlook other seemingly small expenses such as office cleaning services from reputable service providers such as JAN-PRO, security, and more.
Utility expenses often apply to traditional commercial offices as well as brick-and-mortar working space leasing arrangements. In addition, as a small business owner, you’ll be responsible for handling various utility bills, including water, electricity, internet, phone, gas, and more. Therefore, when drawing your business budget, it is essential to factor in all relevant utility bills as both startup costs and ongoing expenses.
4. Payroll-related expenses
Suppose you have hired employees for your small business. In that case, you will want to pay them even when your business is not generating good income yet. Additionally, you must allocate a certain amount of money to pay yourself. Some of the payroll-related expenses you must budget for include employee benefits, commissions, overtime pay, and stipends.
5. Professional consultants’ fees
It is tempting to take on as many duties as possible to cut operational expenses for your small business. However, it is recommended to hire professionals such as business lawyers, bookkeepers, CPAs, and more. For instance, an experienced accountant can explain various business structures such as limited liability companies, corporations, sole proprietorships, partnerships, and more. They can also ensure that your business is complying with the existing state or federal regulations.
During tax season, your business accountant can also save your business a lot of money in deductions on your tax returns, particularly if you have complied with all relevant regulations. Even when your business cannot afford to have an in-house accountant, business lawyer, and bookkeepers, you may want to outsource these tasks to professionals. Remember, outsourcing is way affordable compared to having in-house accountants, lawyers, or even bookkeepers.
6. Marketing-related costs
After launching your small business, you will need an effective marketing strategy to spread the word about your brand, services, and products. For example, you may want to invest in business cards, brochures, banners, online PPC advertising, print ads, and more.
You may also want to have a professionally designed website for your business. After all, an increasing number of consumers first check a product online before they decide to buy it. This is the main reason you should budget for online advertising, which means you must have a business website and a solid digital marketing strategy for your business. Account for the relevant costs in your business budget.
If you plan to start a small business, it is in your best interest to consider all relevant costs. Effective budgeting is one of the cornerstones of a solid business strategy. Factor all the six expenses small business expenses in your business budget to ensure the survival of your new venture.