The type of business you are in and the ambition of your initial plans will obviously have a big impact on your year-1 start-up costs.
In the initial stages of any business venture, finding external funding may be tricky. That’s because typically sources of funding, including banks and other types of investors, may require you to have a proven track record and at least a year or two’s trading under your belt.
As a general rule, you might need find money to meet start-up costs in some of the following areas.
Setting up the company
For many small businesses, there are typically two initial company types of company structure:
- the sole trader;
- the limited company.
The most suitable option for you will depend on a number of factors. One main consideration is that, as a sole trader, you will be personally responsible for any financial liability resulting for your business.
Operating as a sole trader may involve little or no initial outlay in the setting up of the legal structure of the company itself and you will typically not be required to have an accountant produce your end of year figures.
With a limited company there are costs associated with registering the company itself, as well as a requirement for formal and professionally produced end of year accounts.
Advertising your product
For any business, attracting and retaining customers is the key to running a successful operation.
Your company name and logo will be a potential customer’s first impression of you – so make sure these are eye-catching and informative.
How and where you market yourself and your company is obviously important, as is the budget that you can afford to allocate to such.
With some businesses, a dedicated website may be advisable while in others local press advertising may be the most effective.
Business equipment and the tools of the trade
Costs in this area will obviously vary considerably depending on the type of business you have.
Do you need to factor in rental costs for premises or are you going to work from home? If you plan to work in other people’s homes, e.g.as a plumber or hairdresser, then you’ll need some form of transport as well as the tools of your trade.
Professional insurance might be essential. Remember to budget for it!