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8 Unexpected Costs Of Starting A New Business
(This is a contributed post)
How much does it cost to start a new business?
Seasoned entrepreneurs agree that it is virtually impossible to launch a business for free. Even in a minimalist workplace environment, you will need to include essential costs, such as branding design, product or service creation and promotion, website domain registration, recruitment or outsourcing talents, etc. It isn’t reasonable to expect your venture to be profitable from Day One, as you will be facing unavoidable costs to bring it to life.
However, unavoidable costs are not a source of worry for most entrepreneurs. More often than not, first-time business owners rely on a detailed business plan to estimate their future expenses. Your business plan will act as the bridge that connects and brings together your resources and your goals. It defines an actionable itinerary, both to seek the appropriate financing options and to build your forecast profit.
However, some business costs fail to appear in your business plan. They can put at risk the survival of your venture and drag your finances down. Here are 8 expenses new entrepreneurs are likely to forget.
Lacking in your market research
While we all understand that market research is a crucial part of your business strategy, it doesn’t mean that aspiring entrepreneurs get things right. Indeed, market research is designed to identify gaps in the market. It is often a case of what comes first: the research or the business idea. In an ideal world, your research will help identify opportunities, which you can target with the right business idea. More often than not, the business idea came first, and entrepreneurs use market analysis as a way of justifying, improving, or testing the idea.
There is no right or wrong approach. But it’s easy to unwillingly bend your market research results to validate a bad idea. As a result, you could miss future opportunities or waste your investment in a business that is unlikely to succeed.
Costing business banking
Launching a business on a limited budget means you need to be careful about unnecessary administrative fees that could affect your day-to-day finances. It makes no sense for a small venture not to open a free business bank account. Ultimately, banking fees can weigh down business growth and limit cash flow. Depending on your type of business, a commercial bank account is indispensable for tax purposes. With no way of avoiding a business bank account, you need to focus your attention on fees:
- Monthly fees
- Transaction fees, which can withhold up to $3.50 per assisted transactions
- Currency exchange fees, which means you can pay up to 4% of the total transaction for international payments
- Internet banking fees
- ATM fees
- Etc.
Paid directories
When you launch a new business, you need to ensure it is listed in the relevant business directories. Directories can be free, or they can require payment to update your details. Your local Chamber of Commerce is likely to offer a membership package. However, you can keep your business visible online without spending anything. Google My Business profile pages are free to set up, and they guarantee a presence in local search results. There’s no need to pay to appear on a list of businesses.
Business cards
There’s something exciting about handing your business cards at a trade event. The gesture appears professional and self-confident. That’s probably why a lot of small businesses still spend a lot of money on designing exciting business cards. In reality, your business card is likely to land in the bin. Most people can find all the information they need online, so why should you give them a printed version of the contact data that are published on your website? Additionally, networking events tend to measure the success of the performance by the number of business cards traded. You may come back home with a pile of cards, but will you trustfully follow-up? More often than not, business cards get lost in the pile and forgotten.
We’ve got an app for that
There are over 2.7 billion smartphone users in the world. Of course, it makes sense to create an app for your online shop or your service. Why create an app? Because 90% of the time you spend on mobile is spent on apps. Except for one thing: Developing an app is time and money-consuming. You may reassure yourself with the knowledge that the average smartphone user has approximately 90 apps on their phone. However, people spend the majority of their time using their top 10 favourite applications.
Trendy workplace
Open-plan workplaces are popular among modern businesses. Entrepreneurs are keen to establish their business culture through the workplace layout. From the choice of vibrant colours to the addition of an appealing break room, it’s easy to see how business offices can get expensive.
Unfortunately, the pandemic situation has dramatically transformed employees’ priorities. Most professionals expect to work remotely. Unless you need a brick and mortar presence, you’ll be wasting your money with a physical office.
Branded freebies
When was the last time you got excited about a free pen?
Pens, notebooks, and mugs are some of the most common freebies. They offer a promotional advantage as they can be branded with your logo. But before you order a delivery of branded pens and mugs for your next trade show, you may want to ask yourself an important question.
Do you need another pen/notebook/mug?
Most people don’t take written notes anymore. Besides, we all have more than enough mugs at home and in the office. In all likelihood, your customers feel the same.
SEM budget
Search engine marketing, SEM for short, refers to paid advertising on Google AdWords channels, from SERPs ads to the Display Network. There is no denying that your SEM strategy can boost your brand and profits. However, you can rely on paid advertising to create a trust baseline with your audience. Just because your brand is visible; it doesn’t mean your audience group will feel confident purchasing from a new business. Therefore, it is more effective to focus on networking, advocacy campaigns, and social influencers to create a positive first impression.
Are you wasting costs on business activities that are detrimental to your growth? When you launch a company on a tight budget, you need to make every decision and campaign count. Therefore, you can afford to miss your chance by wasting money on ineffective activities.
