Costs business owners have to consider when launching a startup

On Behalf of | May 1, 2019 | Business Formation

Most entrepreneurs are so consumed with starting their own company that they fail to stop and consider all the costs that are involved in getting their business off the ground. One of the most costly expenses a startup company faces right off the top is equipment costs. Whether you need a truck, computers or kitchen equipment to run your business, the costs for these can easily add up to tens to hundreds of thousands of dollars. Office space is another costly expense. It can run anywhere from $100 to $1,000 per worker. You can minimize your costs by initially working from home, traveling to your customer or by meeting at a co-working space. In addition to office rent, there are also utility costs. A good rule of thumb is to plan for utilities such as phone, water, electricity, internet and gas to cost about $2 to per square foot of office space. If your company sells products, then you should be prepared to commit as much as 25 percent of your company’s total budget to acquire inventory. Deciding how much inventory to have on hand to meet customers’ demands without it spoiling or getting damaged isn’t easy. You should also be prepared to spend at least 10 percent of your startup’s budget on office supplies and furniture. Purchasing a desk, chair, filing cabinets, computers and other equipment for each staff member can quickly add up to as much as $5,000 per office. Supplies like printer ink, computer software, paper and pens can cost you as much as $80 per month. Another costly expense that you have to prepare for is payroll. It can eat up to half of your entire budget if you offer stipends, overtime pay, commissions and bonuses. When you start your business, it’s important to keep your payroll costs close to 25 percent of your budget. With all the different online marketing methods that exist, you can spend little to nothing and still gain significant traction for your business. With all the different self-guided tools that exist, you can build and run your website for around $25 per month. A consultant such as an accountant can provide money-saving advise for your company. A business formation attorney can help you incorporate your Cincinnati startup. They can also give you advice as to how to best reduce your risk of exposing yourself to potential litigation.