8 tips on identifying the main costs when starting a business

You’ve done your research and you know your idea has got legs. But before you decide if starting a business is for you, it’s vital that you understand the costs involved in setting up, and work out if you have the budget to cover these.

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3 min read

1. Start with your exploration costs
These costs are all pre-revenue so will be incurred before you start to being in any cash and could include market research if you use an agency or consultant. There’s a lot here you can do yourself by building up a picture of your target market, and using free resources such as the Business Gateway Market Reports or Research service. The Research service can send you a free report on the sector and target audience you’re thinking about.

2. Before you start trading
You need to think about your digital ‘shop window’ and allow for the costs of creating your logo, business cards website, social media, advertising for launching so your customers can find you – this could be digital marketing via paid for social advertising or leaflets/posters. There are free platforms available - such as Canva – which you can use for branding or you might choose to engage with someone to do that for you. You’ll also need to include the cost of website hosting and licenses for any software you’re planning on using. Check out our DigitalBoost support programme to find out more about how to use digital marketing and social media when starting up.

3. Do you need physical premises?
If you will be taking on premises eg. a shop or an office, you need to factor in the cost of kitting this out with furniture or equipment or a deposit with a landlord if necessary. It’s also important to budget for the installation of your digital infrastructure including your wifi and/or landline. You’ll also likely incur solicitor costs whether you are renting or buying property so find out what they’ll be and add that into your budget.

4. It’s vital to allocate budget towards professional fees
This includes the cost of accountant or bookkeeper and solicitor if you’re setting up as Ltd company and want them to handle the setting up. fees. There are many free accountancy software options so it’s worth checking them out first as using one of those could save you money. HMRC has a page outlining the different accountancy software options available. There are also fees associated with certificates and inspections required for health and safety or food hygiene, for instance if that is applicable to your business.

5. Every business needs insurance
There are several different types of insurance to consider - public liability, professional indemnity, employer’s professional insurance (this one is a legal requirement if you’re employing staff) and building & contents insurance.

6. Don’t forget to include all your equipment & supplies
This could initially be simply a laptop if you’re a consultant offering your services from home, but depending on your business, you may also need to consider printers, stationery, signage or livery for your vehicles. You’ll also need to factor in the costs for data storage and back-up, as well as software licenses and mobile phone contracts.

7. Plan ahead if you’ll need to buy stock
If you need to buy stock for your business, plan ahead to establish what you need and add in that cost. It’s expensive to have too much stork, or not enough. Building up good relationships with suppliers can help cash flow but make sure you pay it when you can rather, than putting it off.

8. Think about the future
The biggest costs for any business are premises and staff and, although you may not have either at the start, it’s helpful to forecast what these might be as your business grows, to work out when your business could potentially break-even – and then start to make a profit! Download our free business plan template our free business plan template to help get you started.

Where next?
Starting up can be a daunting process, but you don’t have to do it on your own. Get in touch with your local Business Gateway office and they can help you work out the costs involved with bringing your idea to life.

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