Though many businesses may have start-up costs unique to their business lines, certain costs that are incurred by start-ups simply cannot be avoided. Costs such as office space, utilities, office supplies, marketing, taxes and other obligations are examples of these. However, there are ways that start-up businesses can mitigate their start-up costs and bootstrap themselves in order to save money.
The start-up costs associated with any business can depend on many things. Every business has different requirements, but there are fundamentals that every business has: fixed costs (costs that are firmly set) and variable costs (costs that can fluctuate throughout the course of the business).
For example, establishing an acceptable level of overhead will influence to what degree the business will be separated from the owner’s personal life. Overhead will play a huge part in what kind of costs will be incurred. Many people will use their personal possessions for their business in the start-up stage, such as a vehicle, cell phone and a separate home office room as an inexpensive way to get their fledgling business up and running.
Don’t forget to work closely with a tax advisor and legal advisor to ensure that certain expenses are tax-deductible and to verify that the business is in compliance with all applicable laws and regulations. Dealing with the tax authorities is something any logical small business owner will want to avoid from the get-go, and something they will prioritise having a handle on throughout the progression of their ownership.
A business owner should also consider everyday operating costs that will come up regularly in the course of running a business. Some of these costs may be required even before the business is operational and on an ongoing basis thereafter, like insurance, loan payments, wages and taxes.
As far as start-up capital, don’t be afraid to start a business without any funding beyond what is immediately available. More often than not, the business owner will consider the start-up as a second business in conjunction with present employment. Sometimes, a business owner will have to make ends meet by working on the start-up business during evenings and weekends. This way, if the business does not meet expectations, at least there is a backup plan.
However, depending on the nature of the business, an outside infusion of capital may be necessary. For example, equipment or inventory costs might be substantial. When determining financing needs, remember that almost every business underestimates what is required of them.
Moreover, business owners underestimate the sources of capital available to them. Sure, there are friends and family to lean on for investment, but there are also local start-up incubators, angel investors, crowdfunding sites, innovation contests and small business grants and loans that are geared towards helping start-up companies gain essential early-stage capital.
Regardless of what costs are incurred, or how grand the vision of the business, a business owner must be realistic in the start-up stage. Being realistic means working within the confines of the budget and the confines of essential spending. It also means that a realistic business plan must also include projections based on the existing capabilities of the business, realistic capital and revenue projections and whether or not the actual business model is feasible – i.e. a business model that is capable of making money.
Start-up owners may have a long and arduous road ahead of them but every little bit that helps to mitigate the early bumps in the road in the form of expenses or debt is always welcoming.