Many people dream of going into business for themselves. If you have an entrepreneurial streak and think that you are ready to start your own business, you’ll first need to calculate how much money you’ll need to get started. You can anticipate spending money on the following.
Working Space
Starting out, you may decide that it makes sense to keep expenses down by operating your business from a spare bedroom or a garage in your home. If you choose this approach, your expenses will likely be for utilities, communication devices, and office supplies. If you plan to run your business out of an office, storefront, or other space that’s separate from your living quarters, you will need to estimate your upfront costs, such as a security deposit or closing costs. You’ll have to add in regular expenses, such as rent or mortgage payments and utilities. There may be other construction or decoration costs related to making the workspace suitable for your needs.
Necessary Equipment
Depending on the type of business you run, you may have to invest in expensive equipment. In addition, high-cost items, such as a delivery truck or custom appliances, can strain your budget. For particularly expensive items, it may be worthwhile to talk to a professional to help you determine whether buying or leasing makes more sense from a cash flow and tax perspective.
Permits and Licenses
Certain localities and states require new businesses to obtain a variety of permits and licenses before they can begin operations. Complying with these requirements can sometimes be both costly and time-consuming, so depending on where you intend to locate the business, you may want to contact the relevant governmental agencies well ahead of your planned opening date.
Insurance for Your Business
Any damages to your business premises due to water, ice, fire, or wind could be very costly and could impact your company’s financial health. Lawsuits or other legal claims could also set you back financially. However, the right type of insurance coverage can provide critical financial protection for your business against a wide range of potential threats. A financial professional can work with you to identify the types of insurance you will need. You may need, for example, a business owner’s policy that provides liability, property, and business interruption protection in a single policy.
Marketing and Advertising
Most start-up business have little money available for marketing purposes. However, you will need to spend money on creating a website and a logo. But there are low- or no-cost ways to market your business. Sponsor a local children’s sports team or a community event. A loyalty program that rewards members when they spend a certain amount of money can generate additional sales and can often succeed in keeping customers coming back to your business repeatedly. Also, consider product bundling, an effective sales promotion tool that involves selling several products or services as a single, combined unit, often at a discount. Finally, make certain that the content on your website is optimized for search engines. In addition, add your business to the business listings featured on Google and various other platforms.
Wages and Benefits
Be sure to familiarize yourself with the wage and hour laws that apply in your state if you anticipate hiring one or more people to work in your business. It’s important also that you understand your obligations as an employer when it comes to payroll taxes, workers’ compensation insurance, and employee benefits. The insights of a financial professional can be invaluable in helping ensure you understand state and federal labor laws.