Hidden Costs of Starting a Business
Starting a new business is exciting — you’ve dreamed, you’ve planned, and you’ve written a compelling mission statement you’re proud of. Now you’re ready to share that mission with the world! As a small business, the list of to-dos to get your business running may seem never-ending. From marketing to finding a space to call home and moving in, you have a lot to consider. In that process, there may be things you don’t account for in your budget. As a small business, we at 95Visual have been through it and we often see some of our clients go through their starting process as well. Here are 5 costs that can sneak up on business owners when starting out.
First things first, rent. In order to start any physical changes or buildout necessary for the space you will have to get the lease signed and rent paid. Most people know first and last month’s rent will be due at move-in, much like moving into an apartment. Construction can come with hiccups or delays along the way, so while you may have thought it would only be a few weeks of construction it could turn into several months.
These delays mean paying rent without bringing in money, yikes. It also means the buildout costs may increase, especially if more work is required than was estimated. Just the joys of starting something new and gathering stories to tell regular clients after the dust settles! Don’t forget about renter’s insurance — it’s not just for apartments. Businesses generally need a few types of insurance but building management will probably require that you have property insurance as well.
Permits and Licenses
The paper trail required to open a retail boutique vs a coffee shop is very different. When you’re in the midst of opening your business it’s easy to give your attention to other parts of the process. Sure, going to get these licenses is as fun as going to the doctor but they are necessary and if you are prepared for the cost it will set you up for success. These requirements may include a fire permit, general business license, sales tax license, a health permit, and even a sign permit. And if you are selling food, there’s a whole lot more where that came from!
The average cost of training a new employee takes into account time, equipment, and materials. According to the 2018 Training Industry Report this cost was up to 11% of a business’ budget or, for the average company, around $1k per employee. If you aren’t the one providing training then you probably have a service or designated trainer for the business — another cost, but it allows your time to be free for other tasks.
Being open for business means you’ve made it over many hurdles already! Now you have to get customers in the door. The cost of marketing may surprise owners when they realize how much work it may take to reach all the people they need to, at the right time. It’s common for a business to average $10–15, according to Propeller, in advertising to convert that ad to a single customer purchase. If the cost of your product doesn’t account for your acquisition costs, especially in the beginning, then you may lose money. Revisiting your business’ pricing with this in mind will save you from surprises later. You’ll need to set an overall budget for your marketing efforts, just so you know to stop at a certain point if it’s not working, or even increase marketing if it is.
Branding and Website
Website time! As you can imagine, this is when we meet many clients that are starting a business. They know they need a website to drive business and a logo to make them memorable but may not realize the process begins with branding. Branding is key to keeping communication cohesive across all platforms, from company emails to social media graphics. Along with great branding, we suggest a business invest in high-quality photography as part of the content for their new website. New written content is also necessary to ensure your audience receives all the information they need about the business. Content is something that a business can do on their own but it requires time, and many firms require content before a website design kicks off. When taking all of these aspects into account the cost of a web project can be anywhere from $5–20k, depending on what features or functions the business needs.
95Visual offers a range of web services that include branding, content strategy, and fully custom website designs. Our team takes the time to learn your business, what’s important to you, and how to best serve your web needs. Visit our services page to learn more.
With these costs in mind, we hope small business owners feel prepared and their task lists less daunting.
Originally published at https://www.95visual.com on April 23, 2020.