Keeping your costs down as you start a business is vital to the success. The additional pressure of having to pay off debt is avoided, and as long as you have what you need to operate effectively, reigning in your spending gets you off to a good start.
Controlling initial costs
With the cost of renting premises being so high, working from home provides one of the biggest cost savings when launching a business. Here are some other ways to save money:
- Trade goods or services with other businesses
- Borrow office-related or other items from friends and family
- Buy second-hand
What might the start-up costs include?
When calculating your costs, include everything you might need over the course of a year. Consider:
- Stock and materials
- Premises: refitting; redecoration; rental deposit; service charges
- Vehicles: insurance and tax
- Marketing and advertising: for the launch and ongoing campaigns
- Fixtures and fittings
- Solicitor and accountant’s fees
- Uniforms for staff
What about your overheads?
These are fixed costs and might include rental payments or mortgage instalments, business rates, utilities, telephone and broadband including line connection, and relevant business insurances.
The cost of employment, including ‘hidden’ costs, is high. In addition to wages, tax and employer NICs, you may have to pay for staff training and the cost of job adverts. Also, don’t forget your own salary!
Once you reach a total cost for starting up your business, compare it against your sales forecasts to see if what you are doing is viable.
If the figures do not add up to your satisfaction, at least you will know that action is needed. This may be developing a plan to make more sales, reducing costs further or looking for different start-up idea.