If you’re looking to start a new business, you may feel daunted by the prospect of managing all the finances and costs that go with it. Many businesses fail simply because they don’t manage their cash flow properly – in fact, poor cash flow is considered to be the major problem.
With this in mind, focus not only on the incredible product or service you want to get out to market, but also dedicate time getting your expenses in place as well.
As a business owner, it’s critical to understand how much startup and monthly expenses will cost before you even get started with your brand. and that you have enough cash in your bank account to cover your expenses if sales do not start rolling in within the first few weeks.
Here’s a step-by-step guide to calculating your costs when starting a business.
1. Understand what to include in your start-up costs
You don’t just need to pay for the main things such as production costs and stock, your wages and rent for your office space. Your start-up costs will differ from other businesses, but here are a few main ones to think about:
Will your employees be traveling to various locations? Think of all the possibilities of running a mobile company. Effective networking requires attending conventions, in-person meetings, and the like. You will also need to take fuel costs into account if you are sending employees out on the field.
Business insurance applies to your property, your business as a whole, and for any fleet or company cars you have. If you have drivers out on the road making deliveries or traveling to jobs you may want to consider business breakdown cover to ensure they’re covered.
Running a stable, functioning working environment is something you also need to factor in. You’ll want to ensure these are factored in to keep the lights on and the radiators running in the winter. These include gas, electric, waste services, water delivery, and more.
Internet and phone installation
Your business can’t go far without these. Oftentimes, you can get a deal on phone installations by buying a bundle for business.
Finances and being organized are key. This is an integral part of growing your business.
If you don’t dabble in the books you’ll need to hire someone to help with the financial side of things.
Office furniture and equipment
This covers everything from your desk and your chair to your computer. It may seem rudimentary, but these expenses add up; especially if you’re going for a modern, trendy feel for your office.
Get your brand out there. Be bold, get noticed, and think outside the box. Hire a top-notch team to take your brand to new heights.
There are a number of ways to do this with a modest budget, but you’ll need to invest in some form of online content marketing or even print advertising to reach more people. Influencer Marketing can also be leveraged as a reasonably priced (or perhaps free, if you’re exchanging your product or services for posts) solution to advertising.
To learn the ropes of Influencer Marketing, download Nimble’s Ultimate Influencer Marketing Playbook here.
Not everyone is a whizz in the back end of a website, so you may need to hire professionals to pull together a functioning website for you.
You may need to pay a professional to put together a logo and branded material for you. Graphic designers can run steep, but you may already know someone who could refer a reputable person to fit your needs and execute your image.
Look after your employees by staying on top of monthly requirements. This also protects you by ensuring that your business is following all necessary conduct, guidelines, and labor laws.
National insurance and pension contributions
You’ll need to factor these in when calculating wages.
Ensure you’re accounting for these costs in your initial calculations. Include everything, even if it seems trivial like stationary or cleaning equipment. When it comes to working out how much profit you’ve made at the end of the year, you’ll need every single start-up cost to deduct from that final total. This will tell you how much money you’ve actually made.
2. Always overestimate when budgeting
If you think your website development is going to cost $2,000, assume that it will cost $3,000. This means you’ll put aside more of your initial budget and have more to play with if the cost really does go over. If it doesn’t, that’s great news and once the website is live you can move that spare cash into another business cost.
3. Have a plan to track what you spend
This could be a spreadsheet, a file system, or keeping notes in an app. You must track every expense your business makes starting up to the penny. Start by creating a Microsoft Excel spreadsheet to keep everything in one place.
It’s also important you keep your receipts for expense and payroll purposes.
Ready to cover all bases when it comes to start-up business costs? Keep these simple points in mind and ensure there’s no head scratching when it comes to tax return month or dealing with your accountant.