When starting a business, you need to count every penny, as the aim is to become profitable as soon as possible. There is no need for excessive spending on start-up costs; if these costs are too high and not managed properly, it might well affect any budget you had set aside for investing in the growth of the business in the future. Remember, this is only the beginning of the life of the business, and any money you spend, has to be spent wisely.
One of your first business startup costs will be your business branding. Your brand identity is a vital factor that will make the business stand out and most importantly needs to be memorable. In order to keep this cost down you can find excellent freelance graphic designers who can create memorable company branding at a lower cost than contacting a design agency. Get some ideas for how you want to present the company before contacting a designer in order to reduce the time and money spent on the design. Remember not to copy other company logos, or make them look similar, even if they look cool! This also applies to company name.
Business insurance is another fundamental start- up cost which needs to be considered as a priority. Shop around to ensure that you are getting the best deal, and remember that providers do not always reward loyalty and prices can sneak up – don’t stick with the same insurer out of habit, make sure as your business grows that your insurance is still the right choice. Consult your financial advisor frequently and enquire about getting financial support, for example there maybe business grants in your local area for new companies; this will not only keep your initial costs down, but it will reassure your business investors and save money towards the other needed start-up expenses.
There are start-up costs that will be essential in order for the business to function, so prioritise these expenses into the start-up cost budget. For example, when thinking about rent as a start- up cost, it is vital to find a good location which is accessible but not in an expensive area. As the business is only just beginning it would be worth starting small and upgrading in the future when the business has a steady and reliable income. Remember, Apple started off in a garage!
Other startup assets such as equipment, furniture and machinery will be worth getting second hand, for example online or charity shops. Sometimes things are offered for free. Leasing equipment is also a great option for start ups as there is very little to pay upfront; in addition, any technical issues are generally resolved by the firm who lease the equipment at no cost to the business (another saving). You can also spread out the cost of big purchases like IT equipment as many companies offer a hire purchase scheme.
Keep your marketing online. With technology being the center of attention, don’t waste start-up costs on physical advertising. In today’s digital world, social media is a widely accessible way of reaching out to people. Whilst you would have to pay for your own website, advertising your business can be done via websites such as Instagram, Twitter and Facebook pages. Use social media and take it to your businesses advantage as it’s a free and effective marketing strategy. You will be able to find your audience and if publicized professionally it will save money in the future.
Additionally, in the early stages you want to keep your labour costs small, so aim for a small manageable team. Labour costs should also factor in employee training, so consider taking on apprentices, who may be receiving college based training in addition to learning on the job with you. Not only will they have a definite career path but as their experience increases they will be a huge and valuable asset to your team whilst saving money on training from scratch.
Overall, a startup has some vital costs to bear but they should be considered carefully, however there are ways to save money and keep costs to a minimum. Starting a business, and being in debt initially is a worrying period, but being sensible during this period and employing good bookkeeping will reap benefits and it will hopefully be overcome quickly.
The experts at Neil Smith Accountancy are on hand to help from initial start- up to established company, providing accounting, tax services and business advice. Get in touch for a free consultation.