Small business owners are often blindsided by all the things they have to pay for when they start. The worst mistake you could make right now is to jump straight into the planning stage without sorting out your startup costs. There might be lots of things you have to cover before you can even start operating lawfully, so unless you have that money and enough capital to run your venture, you can’t start a business. You also don’t know how much money will actually stay in your pocket if you don’t know the initial overheads. Let’s take a look at some of the significant expenses you’ll have to face when starting a new small business.
If you are thinking of starting your business without speaking with a lawyer, know that this is not the best idea. There is no reason for you to start without knowing some of the legal consequences of your actions. You also have to have a clear understanding of the regulatory landscape in your industry.
This is why you’ll need to find a business lawyer and consider keeping them on a retainer. Retainer fees vary greatly, so you will need to inquire with a few lawyers to know how much you can expect to pay, but you should set aside at least $2500 per year on lawyer fees.
You can’t start a business from a physical location without getting commercial insurance. Likewise, people who run their businesses from home should also get commercial insurance. This will protect you if someone breaks in and steals and/or damages computer equipment, inventory, or tools. You can also get coverage against floods and other natural disasters.
Then, you have liability insurance that will protect you in case someone gets injured or if you make advertising mistakes. It would be best if you also looked at things like income insurance to cover you in case you can’t open your business for some reason. And, if you have employees, you have to look at workers’ compensation.
This is one of the costs that business owners most overlook when they start a business. It would help if you never started a business without thorough market research. This isn’t something the average person can do on their own. You should hire a professional to do this, and they can get costly.
How much you spend will largely depend on the nature of the industry and how extensive you want the research to be. At the low end of the spectrum, you could get market research done for around $500, but you could be spending up to $10,000 and more for something more precise in a complex industry. So, this is something you’ll have to be ready for.
If you haven’t accounted for these few expenses for your small business, you have to mark them down right now. Get as full of a view of your initial expenses as possible, and don’t be afraid to ask for assistance if you need more help with this part.