Costing a new business? The 5 key areas you need to include in your calculations…
Starting your own business is such an exciting time but it's essential to keep on top of your finances. They can quickly run away from you…
By accurately calculating the cost to set up a company, you can save yourself from nasty surprises down the track.
After all, one of the most common reasons that small businesses fail in the first six to twelve months is lack of cash flow to meet their expenses.
Cost to set up a company: the five key areas to focus on
To help you survive your first year in business, here are five key areas you should include in your calculations, as you anticipate start-up costs for your company.
1. Office and employees
One of the highest startup costs is usually buying or renting office space and paying employees' wages.
Before setting up shop, work out the amount of staff required to run your business effectively and then forecast collective wage costs (including super contributions and other benefits).
When you’re calculating the cost of your office, don't forget to factor in initial and ongoing office costs such as telephone and internet installation, office equipment, fixtures and fittings, power connections and your bond.
2. Fitting out your office
Whether you’re renting space or working from home as a solopreneur, you’ll need to allocate funds for furniture and office supplies.
The purchase of computers, printers, stationery, desks, chairs and all the rest add to the cost to set up a company and must be factored in to your calculations.
3. Inventory costs
If you’re selling products or running an ecommerce business of some kind, you will also need to factor in the initial costs for stock purchases.
As time goes by over the first 12 months, you will need to allocate funds to maintaining an optimal inventory without locking up too much cash on the shelf.
4. Marketing and signage
Before your business even opens, you’ll need to make people aware of its existence.
In the months leading up to your grand opening, you’ll have to advertise your startup to the public and conduct market research about buyer habits and target demographics.
Costs for professional signage for your shop front or office must be factored in, as well as the cost of graphic design for your branding.
You’ll also need to consider costs for social media marketing and developing a functional website.
5. Accounting and legal advice
Two professional services that most successful start-up businesses need to invest in are accounting and legal advice.
When you start out, you’ll need to learn about statutory requirements, such as licences and insurance.
You will also need advice from a professional accountant to help you establish tax structures, cash flow projections, marketing plans and growth strategies, as well as ongoing bookkeeping to assist with future tax returns.
Need help with working out costs to set up a company?
Of course, there’s more to working out the cost of setting up a company; but, by starting with these five areas, you will cover most of the initial outlays.
As a certified practising accountancy firm based in Perth, we help many local startup business owners cost and plan their businesses and stay on top of the financial side of things
Call us today for an initial chat about what you need: (08) 9356 8033.