Starting your own business is super exciting but also wildly challenging. Being your own boss and making your big ideas happen sounds awesome. That’s why you have to get real about what it takes, or you’ll be in big trouble.
In this guide, we will walk you through the high costs step-by-step and share some helpful tips we found worth sharing. Keep on reading, and we’ll get you prepped and ready to launch your startup.
Keep in mind all the mentioned costs are estimates, and the original costs may differ. There are several factors behind the difference, including location, industry, business size, quality, and timeframe.
Business Structure Cost
First things first, deciding whether to be an LLC, S-Corp, C-Corp, or other entity type. Each has different pros and cons around legal liability and taxes that you’ll need to research to make the best choice. Registering will probably cost a few hundred bucks, depending on your state. An LLC may be $300, while a Corporation could be $800. Don’t forget licenses and permits! Some industries require special ones that could seriously cost you down the road if you don’t get them in advance.
Sit down with a business lawyer for a couple of hours to make 110% sure you’ve crossed your t’s and dotted your i’s in setting up your business correctly on paper. It’ll set you back maybe $200-$500 but could save you big-time hassle later. Think of it as a wise investment in your future success.
Marketing Cost
Once you’ve got the legal bases covered, now for the really fun part: getting your name out there! Having a quality website designed is an absolute must these days. Budget at least $2,000, or even $5,000-$10,000 if you want something super robust like an e-commerce site. Paying for online ads on Google, Facebook, Instagram, etc., can help drive targeted traffic to your site, but they add up quickly, usually around $2-$6 per click.
Printed promotional flyers, signs, and business cards to hand out are still great for in-person networking and spreading awareness. Plan on maybe $500-$2,000 to print a first batch. Don’t forget about social media. Hiring someone to handle your accounts as a manager for around $40,000-$60,000 per year can be worth it so you can focus on other crucial aspects of your business.
Operating Costs Add Up
Now, the not-much-compelling-but-utterly-critical part covers the basic month-to-month costs of running operations. Renting for office or retail space alone will likely cost you several thousand bucks a month, depending on your location and size needs. If you’re in a major city, average office space rents for $30-$50 per square foot. Retail spaces might be $30-$75 per square foot. Even a small spot could be $3,000 a month or more!
Don’t overlook smaller stuff like the internet, printer paper, pens, and cleaning supplies. It adds up to easily $100+ per month. Utilities like electricity, water, and waste can cost hundreds more. Then, there’s business insurance, which you should plan on $2,000-$5,000 annually for general liability coverage. Equipment like computers, phones, and basic furniture hits, too.
Inventory & Equipment
If you’re making or selling physical products, get ready to shell out major moolah for inventory and gear. Keeping enough raw materials or finished products in stock to meet demand will cost you an extra 20-30% per year to store and hold in inventory.
Specific manufacturing tools and heavy equipment like 3D printers or industrial mixers can cost tens of thousands for higher-quality industrial-grade stuff. Delivery vehicles are a must for product businesses, too, so plan on at least $5,000+ for a basic used cargo van. Don’t forget gas, insurance, and maintenance costs on top of the purchase price.
Hiring Industry Experts
While it may sound simpler and cheaper to try and handle everything solo as a scrappy startup, consider getting some support in key areas like accounting, HR, and legal right out the gate. Hiring an experienced bookkeeper for a few hours a month will probably run you $25-$50 per hour but provides important financial oversight.
HR pros cost in the range of $75-$150 per hour but can save you headaches on stuff like payroll, benefits, and policies. Websites need maintenance, too. Specify an average budget of $50-$200 monthly for tech checkups. Having the right experts on your team is worth every penny.
Budgeting Tips
The best way to prepare is to make a detailed 12-month budget that includes a cushion for unexpected costs. Look into small business loans, grants, private investors, or crowdfunding platforms to get started. Begin lean and scrappy, then strategically reinvest earnings to scale up as demand grows.
Also, don’t overspend early or load up on stuff you don’t really need.
Negotiate discounts from vendors and suppliers when possible. And be ready to continuously adjust your plans when needed.
Ending Note
Starting a business takes tons of upfront preparation and number crunching. Really nailing down the dollars and cents before diving in headfirst sets you up for success in turning this dream into reality. But ultimately, the fulfillment of bringing your innovative vision to life through passion and grit makes every ounce of effort more than worthwhile.
