The glorified life of an entrepreneur is not for the faint of heart, but if your up for the challenge it can be one of the most rewarding accomplishments. Now something that is really hard to grasp or wrap your head around is, what kind of startup costs will I incur in starting a business and how will this affect me in the long run?
Well to start, every business is different so do consult with someone in your industry or field for more specific fees and costs. But for all businesses, you will run into these 5 costs at one point or another. Look for a blog post in the future on how to properly run your business and get organized but today, let’s focus on the basics. How in the heck do we get started and what should we plan for?
Research expenses: Now this doesn’t always have to cost, but depending on the industry and the level of research needed to start, you may want to consider hiring a market research firm to help you with this. If you are starting a more complex venture you may want to invest a little in the beginning into this to understand your market, if you have a customer base and to verify you are solving a problem. Never create a solution to a problem your customers do not have.
Insurance, License, and Permit Fees: Does your business need to be insured? Do you need a special permit to operate or a license specific to your industry? ALWAYS check these things first before just diving in, this could cost you a lot more in the long run if you don’t properly set up your business and run based on local and federal laws. Take into consideration that you will get sued at some point and cover your bases so you don’t have to stress about it. Put contracts in place to verify you are set and ready to go, and covered in all scenarios. Plan for the worst and expect the best!
Equipment and Supplies: Does your business need equipment or supplies to run? How much? Do you need a running inventory? How much should you keep in your bank account to stay running? Do you need a place to store the inventory? Do you need a storefront? As you can see the questions can be endless when it comes to this topic. You don’t always need any of these things to launch a business, but without doing the first two things; Research and understanding your legal structure, you may not know and start off with too much or too little inventory or equipment to meet orders. Market Research is the key to this.
Advertising and Promotion: Ah, every businesses favorite thing, marketing (okay, maybe not). But marketing is key to your business. Whether that be local, digital, national, worldwide. You have to have a strategy in place to bring in new customers, and keep old ones. Repeat customers are the key to a successful business and you can quote us on that. If you don’t have testimonials and referrals, with today’s competition it is hard to stay afloat. You can try to tackle this yourself, but with the digital space growing and changing your marketing strategy can be outdated as quickly as you implement it. So sometimes it is worth it to pay for someone to worry about that for you.
Borrowing Costs: Business funding, what starts and can keep most businesses afloat! This could be investors, bootstrapping, credit cards, loans, etc. But it does come at a cost, which isn’t bad. Business debt is vital to developing business credit. (check out our blog post on business credit here) Sometimes in order to grow you need $50,000 to front inventory or purchase that new machine so you can fill bigger orders. This is not a bad thing! Growth is an amazing thing for your business and sometimes you need a little help to get there! But you also need to budget properly for the amount of debt your business can afford to take on and be able to grow with it.
Now, I know this may all seem a bit overwhelming. BUT do not fear, Pennington is here to answer your questions, get you the funding your business deserves without the stress and hassle. Our goal is to help you reach your goal!
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