Starting a new business is extremely exciting. Maybe you have a vision of what you want your company to be, and you’re looking forward eagerly to the moment when it goes from an aspiration to a reality.
If you’re about to launch a startup, though, you should be ready for some crucial expenses that you’ll more than likely face, and possibly a few more frivolous ones as well. Let’s go over three startup expenses you’ll want to keep in mind as you embark on this new phase of your career.
1. Essential: Business Plan
Coming up with a business plan helps you to formulate a strategy that you can implement, which will hopefully get you to where you want to be.
A business plan should describe your products, services, and the company idea overall. It should include projections and your sales and marketing strategy.
A business plan should also incorporate debt. Though debt has a negative association, when starting a business "good debt" can be necessary for growth. Yes, there are differences between good debt and bad debt. Good debt is debt that offers you a favorable return on your investment, whether it’s in the form of financial value or quality of life. Good debt can give your business a home with a mortgage, or it could be in the form of a business loan. Bad debt is defined as not helping to improve your life or financial situation. It is money you borrow or spend with no real return.
You should do market research to determine your ideal customer. You’ll also probably want to do a competitive analysis to assess the competition.
This research and analysis will cost money, which is why business plans can get expensive. However, you can often devise ways to keep the cost as low as possible, such as finding a business plan template rather than creating one on your own.
2. Essential: Insurance
Insurance for your business is not a luxury but a necessity. There are all kinds of insurance plans you can get for a business, but at a minimum, you’ll need workers’ comp, disability, and unemployment, assuming you have any employees.
You will probably want to invest in business income and general liability insurance. If you have some properties where you’re creating your products, you’ll need commercial property insurance for those as well.
Certain states require additional insurance varieties, so before you get your company off the ground, check your state’s website to make sure you’re in full compliance. Otherwise, you might face some hefty fines.
3. Non-Essential: Marketing and Branding
We’ve talked about some business necessities. Now, let’s talk about something you might want, but that you don’t necessarily need.
Marketing and branding are two areas you don’t want to neglect, but you also don’t want to blow your entire operating budget on them, especially in the early stages. When you launch your company, you’ll probably want to stick to the minimum in this department.
You’ll want to create a business website for your company, but it can be relatively bare bones. After all, you likely don’t have money like Amazon or Apple, at least not at first.
You can do market research to determine the social media platforms on which you’ll want to maintain a presence. However, you don’t need to spend a ton of money on promotional materials, paid ads, your logo, and so forth. You can gradually start putting more money into your marketing and branding efforts as you become more successful.
Know What You Do and Don’t Need
When you start a business, you’ll always need the appropriate insurance policies, such as workers’ comp, unemployment, and disability. You may also need commercial property insurance, vehicle insurance, and others. Check your state’s website to make sure you are not neglecting anything essential.
You’ll also need a business plan that outlines the company idea, along with your products or services. It should include competitive analysis and market research as well.
You will need to dedicate money to marketing and branding, but don’t go overboard in this area immediately. You can stick to a more basic website and minimal social media presence until you can free up more cash to bolster your public profile.
