So you’ve got an idea for a great new business, that’s fantastic! However, it takes much more to set up a business than simply having a good idea. Setting up a business isn’t easy, and even if you think you can get it off the ground cheaply, there may be some hidden costs you haven’t considered. Before you jump the gun and quit your job to set up your exciting new venture, take a look at these overlooked costs that could make you think twice about setting up your own business.
When it comes to setting up a business, you might have all the forecasts there for product development and manufacturing, but one of the things you might have forgotten about is marketing. One of the key reasons why 50% of startups fail within the first 12 months is marketing. Sure, you can market your business for free via social media – but what happens if nobody’s paying attention? Marketing is something you’ll have to put some money behind in the early stages of your business to help get it noticed. Without it, you could find yourself with an amazing new business that never makes it off the ground because nobody’s ever heard of it. Set aside a marketing budget, it’s more important than you realise.
Technology and equipment
Working on your home laptop is great for now, but what happens when your business starts to take off? Investing in technology can help to improve your small business, but you’ll need to have the funds available to do so. Even if you think you can get by on what you already have, you’re going to need to consider what happens when your business expands, or you start hiring employees. Having the right technology is important, so don’t let your business fail by not considering its significance.
Tax and NI
When you work for someone else, tax and National Insurance are things that sort themselves out. When you work for yourself, however, these are things you’ll need to take care of yourself. Not paying enough tax or National Insurance could land you in serious trouble and even facing a personal liability notice – things which could kill your business just as they’re taking off. When making your forecasts, make sure you include all the things you’ll need to be paying and consider hiring an accountant from the outset to help you keep your finances on track.
If you’re serious about setting up a business, then making allowances for these costs shouldn’t affect your decision to go ahead. If, however, you find that you’re now facing startup capital that’s much more than you thought, you might want to consider some different options. You could always seek investment from others to help you meet these costs with plenty of new and innovative ways to get some backers thanks to crowdfunding. Creating an effective business plan will help you to make sure you’ve covered all of the essentials, allowing you to plan for the total cost of setting up your business.
Ongoing Costs and How To Reduce Them
As well as being prepared for initial start-up costs it pays to regularly shop around for quotes for on-going costs such as business energy and any business insurance that you may require, e.g. professional indemnity insurance, office insurance and employers liability insurance. Loyalty often doesn’t pay in these areas so budget some time each year to shop around for quotes.