Starting a new business is an exciting time for anyone, and it’s not too uncommon to get carried away and make mistakes. One mistake people often make is not fully planning for all business expenses, which can lead to cash flow problems and be very problematic for your business.
Before starting a business, it’s very important to ensure you have a full understanding of all the necessary costs, not just for the initial launch, but also for the first year or so, and how these costs will be met. Take a look at our list of the top 5 expenses people tend to forget about, and ensure they feature within your business plan.
- Business software
Most modern businesses, both startups and existing, will require some form of business software to operate. Whether it’s HCM software, marketing automation software, or internal communication software, there are usually associated costs which will need to be considered.
You can reduce these costs by understanding exactly what kind of business software you’ll require, and avoid overspending early on in your business. Most business software and apps offer the ability to scale up as your business grows, which means you can purchase a lower cost version in your initial period, and increase the level of service and features as time goes on and your business grows.
Another tip for reducing business software costs is to only purchase what you absolutely need. Don’t be tempted into purchasing software which is unlikely to be used during the initial period, or even software which is a ‘nice to have’. Spending in such a way will eat into your budget, which can be much better spent elsewhere, such as in revenue driving activity.
Almost every startup business will need to factor in recruitment costs, even if the startup is small in numbers initially. Yes, there are free ways to recruit, such as using LinkedIn and free job boards. However, you’ll want to be as effective as possible in reaching the best tallent, and with this usually comes costs.
Costs of recruitment should be used to advertise for roles on popular job sites, and take advantage of features such as priority ads and features within customer emails to the job base. These costs aren’t usually particularly high (<£500 per month) but the return on investment is almost always worthwhile.
- Essential equipment and supplies
Depending on the nature of your startup business, you’ll likely need to invest in a range of essential equipment and supplies. For a typical small office, you’ll need a range of IT equipment, including computers, servers, monitors, printers and more. You’ll also need stationary, pens, paper, and many of the small things you may not have considered.
Savings can be made in this area by buying in bulk from wholesalers, but don’t go overboard. Try to work out what you need to get you through the first year, or even 6 months, and go from there. Remember to place your second order ahead of time, so you’re not short of supplies for any period of time.