The costs of getting your company off the ground will differ a great deal depending on what kind of business you’re building, but you should have a firm idea of what your set up costs are likely to be so you can draw up a realistic budget and seek out the funding you need.
Stuart Lewis of Rest Less says: “It’s crucial that you have a plan so you know where to start. How will you fund your lifestyle until your business takes off? Can you start your business whilst still working to test out the idea? Where will you source products from? What are the costs of those products? What about staff, can you do everything yourself to start or do you need to hire staff early on?”
When starting a business, you will almost certainly have to think about some of the following:
While it is increasingly popular for businesses to forgo having a fixed office space and letting employees work remotely, this isn’t always going to be possible. You may well have to factor in the cost of renting or buying office space or physical premises from the get-go, plus bills and utilities.
If you’re keen to avoid the extra cost of renting office space, our articles Business ideas that you can start from home and How to set up an online shop might offer some inspiration.
You may need to consider tech costs such as hosting a website, storing customer data and licenses for software (such as Microsoft Office). If you’re planning to have employees later down the line, you may need to provide work devices and IT support.
Employment (paying your staff)
It may be that you start off as a one man band, or you may need to employ staff to support you from the get-go. Whether you intend to hire full-time employees or work with freelance contractors, you will have to think about how they get paid and factor these numbers into your startup costs. If you plan on working with agencies to recruit workers or advertise vacancies, you’ll need to consider these costs too.
If you are an employer who is interested in recruiting skilled employees in their 50s and 60s, you can fill out this form to get in touch with Rest Less and promote your company on our job boards to over 900,000 members.
[Recruit via Rest Less]
If your business is going to be selling a particular product, you’ll need to think about the costs of obtaining that product.Be realistic about how much you need to order straight away, whether you are having items specifically manufactured or just ordering goods from a wholesaler to sell yourself.
Finding the best suppliers for your product is key. Many suppliers don’t rely on flashy advertising or search engines, as they only really need to connect with business owners rather than members of the public, so Google won’t necessarily be your friend here. You may be better off attending a trade show or exhibition, which should also serve as a good networking opportunity and a way to get a sense of the landscape.
Once you have a supplier, be very careful with your initial orders. Let’s say you sell two kinds of chocolate and order equal amounts of both, but one of them immediately begins outselling the other. You might end up with not enough of the popular kind to keep up with demand, while the unpopular kind sits around gathering dust. Do a bit of market research first amongst friends and contacts and see what does well before you commit to ordering larger batches.
Sales, marketing and branding
There’s no point being the best at what you do if nobody knows who you are – good branding, marketing and advertising can make or break a company’s fortunes. Most new companies rely on digital marketing to attract new customers, so building a robust web presence with appealing branding and a good website is key, and you should be prepared to hire an agency or contractor to help design these.
Find out which channels will be the best for advertising to your demographic. Different mediums appeal to different age groups and types of people – for example, you probably don’t want to be putting ads in the newspaper if your target audience is mainly younger people.
This is another part of starting a business where connections can be key. Developing good rapports with other businesses can evolve into affiliate relationships, where they promote your business to their own users in exchange for a fee.
There are a few kinds of insurance that will be specifically relevant to you if you are starting a business.
Employers’ liability insurance is legally required if you employ anyone, as it protects employees’ compensation claims if they are injured at work. You can be fined £2,500 a day for not having this in place, so it’s really important to get a policy straight away.
You’ll need to have buildings insurance if you have a mortgage on your workspace or shopfront to protect the premises in case it is damaged or vandalised. You should also strongly consider getting contents insurance for the contents of the building, so you will be covered if they are damaged or stolen.
Professional indemnity insurance is an optional policy you can buy that will cover you financially if a customer or member of the public makes a compensation claim because they think you’ve made an error, such as breaching confidentiality. You may also want to consider public and product liability insurance, which is designed to cover you in case your business or a product that you sell causes injury or harm to a member of the public.
As with any form of insurance, you should compare all the different options available to you, instead of just going for the first and easiest option.
You may well need to hire a solicitor, lawyer or accountant to help with the early admin of starting a business, such as establishing trademarks or copyright, drafting partnership agreements and employment contracts.