As some job opportunities in particular industries slowly diminish, more and more people are taking the plunge into starting a business, each one hopeful that it will grow into to a large one. Drones are affecting the courier industry, robots will affect many industries including security, technology will be replacing jobs in the future - change is constant.
Starting a business is exciting, challenging, rewarding, stressful, full of anxiety, risky, and financially scary.
And it's difficult. About 50 small business owners close their business every day in Australia!
You need to be smart, think outside the square and stay away from negative knockers. If you're starting a business, here are the main costs that you need to be thinking about.
1. Legal and accounting fees
You need to choose the type of entity to suit your business and family situation. Your financial advisor or tax accountant will ensure your business is set up perfectly and minimise your taxes. Now that is money well spent.
These days, there are lots of options if you don’t have lots of money in your bank or rich parents or relatives. 75% of small business start-up financing comes from loans, line of credit and business credit cards - so explore all opportunities.
3. Business coach
Unless you have lots of experience in your industry or have a friend who can mentor you free of charge, I strongly suggest you use a coach that has run successful businesses, can give you case studies of their successes and has clients to call for references.
4. Finance expert
Most business owners have little finance knowledge or experience, so this is a very important appointment to ensure your business is successful.
This expert will assist you put together a budget, cash flow, recommend the best cloud based software, educate you how to read financial reports and understand your statutory obligations and be your 'finance gatekeeper', so your finances don’t get off the rails. You need a qualified accountant, with lots of experience, someone you can trust and is available to meet and talk to day and night!
5. Professional consultants
Surround yourself by these people. It is a must. Don’t be shy to ask lots of questions even if a few say no pay no advice. You cannot do it all by yourself and you will need a variety of people in industries such as Insurance, IT and legal.
Most of us protect our health, home and car, so don’t forget to insure your business. There are a variety of business insurances so find a good Insurance agent and whatever you do - don’t underinsure.
7. Protect Your intellectual property
You may not think you need this but for under a $1,000 you can protect your business name, logo and trademark. It's much more costly to have to fight your intellectual property if it hasn't been legally protected.
This is an absolute MUST. Your website is your shopfront, and the first thing people look at when they become aware of your business. You don’t have to spend a fortune but make sure you spend sufficient funds so it ticks all the boxes.
9. Marketing and advertising
You are kidding yourself if you can rely on referrals alone to make your business successful. You must spend money on marketing and ensure you have a constant flow of leads to fill your sales funnel. You need to allocate a budget and choose what is best to spend this money whether it be Facebook Advertising, Adwords, networking or others.
You can also take advantage of free advertising and offers on social media, and if you are not that knowledgeable about this, a bit of training will be worth every cent.
You must have certain items of equipment. If need be, you can lease equipment.
11. Office rental
If you do have to rent office space in the early days, you have options of co–working spaces and office shares - and they don't all cost an arm and a leg.
If are in the retail, wholesale, manufacturing or distribution industries, you will need inventory. You must manage this really well, finding the right balance between not running out of stock and not being overstocked.
A good rule of thumb is to be able to have enough money to survive for 6 months if things start very slowly - and don’t rely on making lots of sales in your first 6 months.
And of course, feel free to ask questions here at Mentored at any time.