12 Business Set-Up Costs You Need To Know About

Nathalie jones valiant finance

Nathalie Jones

Wednesday, 27 July 2016

Are you thinking about starting up your own business? Do you know what it’s going to cost? Here are 12 business set-up costs to keep in mind when you’re making the plunge.

Equipment

Will you need equipment to operate your business? Your equipment needs might be as simple as a computer, or as complex as a restaurant or gym fit-out. You might even need a vehicle to get around. You may need to purchase some of your equipment new, or you may be able to get a better deal by purchasing some of it second-hand. Some of Valiant’s lending partners will finance used or refurbished equipment, so keep all of your options on the table and be ready to have those conversations before you make a decision.

Your shopping list might include:

  • Truck;
  • Car;
  • Tools;
  • Specialist equipment for your salon, restaurant or gym;
  • Computers;
  • Till and cash draw;
  • Scanner;
  • Point-of-sale (POS) software; and
  • Office furniture.

Fees

There are certain fees which go hand-in-hand with starting a business, such as business registration fees and insurance. However, there may be some surprises.

We recommend keeping an eye on the following fees:

  • Company set-up fees;
  • Insurance;
  • Public liability;
  • Professional indemnity; and
  • License costs. This is certainly not a comprehensive list. In order to be absolutely sure that you’ve satisfied all of your legal obligations, we recommend visiting the Australian Business License and Information Service (ABLIS) website and consulting your lawyer.

Inventory

Here are some questions to consider when looking at the cost of stock or supplies:

  • How much stock will you need to get your business up and running?
  • How long will your initial supplies keep you going? When will you need to re-order?
  • What kind of trade terms will you be able to get from your suppliers?
  • Will you need to finance any of your inventory?

There are lenders on the Valiant platform that offer inventory financing, so keep in mind that you may be able to get support on this front if you need an initial runway to get your business in motion.

Working capital

How much working capital (available liquidity) are you going to need to keep your business running? For example, you may need $10,000 on hand to pay your employees and buy stock. If you don’t accurately calculate this figure, it may come as a surprise later on and could land you in hot water.

You may want to have a look into invoice financing. If you find yourself in a situation where you have invoices outstanding and are waiting for your customers to pay you, this can be a great short-term way of keeping your business afloat. Some lenders will fund your unpaid invoices so that you have the cash today, and can utilise it while you wait for your customers to pay.

Office space or retail space

Premises can be a huge cost to your business. You might even ask yourself - do you really need office space to begin with? With so many coworking spaces, shared offices or even your kitchen table available, is office space really an essential cost on day one? On the other hand, if you are a retail business like a cafe or gym, them you probably need to rent space. Don’t forget that the fit out of this space isn’t the only cost you will have. You may need to have a lease agreement prepared, reviewed, pay a bond or even be liable for stamp duty on the lease.

Here are some costs you will need to consider if you decide to rent an office or retail space:

  • Fit out;
  • Design;
  • Architectural costs;
  • Building costs;
  • Materials;
  • Lease agreements;
  • Stamp duty; and
  • Bond.

If you are considering buying your office or retail space, there are lenders in our small business loans marketplace that are able to finance projects like this.

Advertising and marketing

Promotional costs can blow out your budget if you don’t plan ahead, and you can spend endless amounts of money trying to get your business out in the market. Here are some costs that you may want to keep in mind:

  • Graphic design of your logo;
  • Design and printing of business cards;
  • Design and printing of menus, posters or leaflets;
  • Creation of website;
  • Set-up of social media accounts;
  • Domain name registration;
  • Domain hosting; and
  • Google AdWords advertising.

Staff

Staffing will be one of your biggest ongoing costs. This brings with it payroll tax and superannuation, so it’s worth spending some time calculating the true cost of employing staff before you begin your recruitment drive. Depending on what type of business you’re running, you may also have obligations to your staff in terms of training. Your accountant or business advisor will be able to give you detailed information in this area.

Here are some of the costs you may need to factor in:

  • Recruitment costs;
  • Wages and payroll;
  • Uniforms;
  • Training;
  • Payroll; and
  • Superannuation.
  • Utilities
  • Most businesses need utilities to run. Consider what it might cost you to pay the following:
  • Telephone;
  • Mobile phones;
  • Water;
  • Electricity;
  • Gas; and
  • Internet connection.

We have included an internet connection here as it is often seen as a necessity for conducting business. You may also allow your customers to use your WiFi, so carefully research the type of plan you take out if that’s something you’d like to provide.

Professional services

Professional services costs when starting up can be unexpected. Hiring an accountant to give you good advice is a must, as is retaining a lawyer for crafting service agreements and reviewing contracts. An IT specialist is vital for most startup businesses now too.

Taxes

Speak to your accountant or financial advisor about the taxes that you may be liable for when you commence trading. You may wish to confirm if you need to charge and collect GST. If you don’t accurately understand your obligations, you may find yourself with a large tax bill at the end of the financial year.

Travel

Will travel be a part of your startup costs? If so, you need to accurately understand what this will cost your business in money and time spent in the air or on the road.

Shipping

Depending on the type of business you are starting, you may want to consider whether you’ll have shipping costs. These might be import or export costs, or if you’re running an e-commerce store, you may be looking at the cost of mailing goods to your customers.

Some of these costs are only associated with the initial setup period, while others will be recurring costs during your time in operation. Be sure to seek advice at every turn, ask those who have done it before, and pivot if you need to. Getting going can be a bit of a rocky ride, whether it’s your first or seventh venture.

_If you find you cannot meet your financial obligations, seek advice and act early. Valiant Finance has a team of credit specialists on-hand, so feel free to give us a call and we can talk you through some of your options. _


Nat is the Communications Manager at Valiant Finance. She has a double degree in Journalism and Law, and a background in the fintech space, hailing from Asia's largest fintech hub, Stone & Chalk.

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