By Tom Svrcek / Published May 2023
There is more to a business than purchasing equipment and renting office space. Especially in the early stages, start-up costs require careful planning and meticulous accounting. Many new businesses neglect this process, relying on a flood of customers to keep the operations afloat. Essential to the start-up is the creation of a business plan—a detailed chart of new business to be developed. A business plan will force consideration of the different start-up costs for the business—those expenses incurred during the process of creating a new business.
Not all businesses are alike, so different types of start-up costs are involved. However, following are a few expenses that are common to all business types:
A new company will never succeed without promoting itself. Promoting a business is much more than placing ads in local newspapers or magazines. It also includes marketing, which is everything a company does in order to attract clients to the business.
Starting a business requires capital. For small business owners, the most likely source of financing comes from a small business loan. You can often get loans from banks, savings institutions, and the U.S. Small Business Administration (SBA)
Businesses planning to hire employees must plan for wages, salaries, and benefits. Check with your state’s Workers’ Compensation Bureau to see what the requirements are to cover your employees if they are injured on the job.
Before adding equipment expenses to the list of start-up costs, a decision has to be made to lease or buy. How much financing you have will play a big part in this decision. If leasing, see if you have the option to buy. What kind of pressure wash-ing unit do you need? Set your budget and stick with it.
Some businesses might require basic licenses while others need industry-specific permits. Carrying insurance to cover yourself and your employees, customers, and business assets can help protect your personal assets from any liabilities that might arise.
It is always a good idea to have some extra money set aside for any overlooked or unexpected expenses. Make sure your company does not fail because you lack the cash to deal with unexpected problems during the busiest season.
It is important to note that start-up costs for a sole proprietorship will differ from the start-up costs for a partnership or a corporation. Some additional costs that will be incurred by a partnership include the legal cost of drafting a partnership agreement and state registration fees. Other costs that will be incurred by a corporation include fees for filing articles of incorporation.
Launching a new business can be a great experience. Above anything else, observe and consult with others who have traveled this road before—you never know where the best business advice will come from.
For more information, call Joseph D. Walters at 1-800-878-3808 or visit www.josephdwalters.com.