Common start-up expenses of small businesses
Boy scouts know the value of being prepared, and business operators should do the same – planning ahead for the costs involved in starting a small business. While the actual start-up expenses will vary between businesses, let’s take a look at some of the costs that apply to most ventures.
Fixtures and equipment: The fixtures and equipment needed for your venture can range from modest to substantial, depending on the business. Even a simple home-based business will typically require a phone, computer and printer in addition to basic office furniture.
Opening stock: If your business involves the sale of a product, opening stock (or ‘inventory’) can be a significant start-up cost. Potential suppliers may be able to suggest required inventory levels for your type of business.
Professional fees: You may need the assistance of your lawyer if the business will be run either as a company or through partnership. Additional professional fees may be necessary if your accountant is involved in the preparation of budgets or forecasts.
Business name registration: If your business will operate under a name other than your own, it is essential to register the business name with the Office of Fair Trading or Consumer Affairs (or similar) in your state. Registration fees vary between around $60 and $220 depending on your business location. Go to www.business.gov.au to register online.
Insurance: Public liability insurance and property cover are a must to protect yourself and your business assets. If you are employing staff (even on a contract basis), workers compensation cover is a legal requirement. Some business activities require professional indemnity insurance. Note too, if you are operating a home-based business, your business assets may not be covered by regular home contents insurance – additional cover may be necessary.
Supplies: Allow for basic office supplies including customised stationery. Buying in bulk can offer discounts.
Business software: Allow upwards of around $150 for business software – an essential tool in tracking the profitability of your business.
Utilities connection: You may be asked to provide an upfront fee for connection of utilities including power, phone and internet connections.
Cash: If your business involves retail sales, it may be essential to maintain a significant cash ‘float’.
Website creation: If you are planning to supplement your brick-and-mortar business with online operations, it’s worth budgeting for the costs of creating a website including web-hosting and web design fees.
Finally, be aware that it may take time for your business to return a regular income, so be sure to allow sufficient working capital to cover your living expenses during the start-up phase.
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