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Estimating Startup Costs
It is really easy to underestimate Startup costs. You will have to think of all running costs for the first 12 months, but also costs that incur before your business has even opened its doors.
Setting up costs
These are the costs that happen before your business starts trading. There are 3 types of costs a company will usually have prior to launch:
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Professional fees
These can range from design work such as logo, website and brochures to legal work.
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Equipment costs
This will include equipment such as desks, licences and insurances.
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Premises costs
If these are not a necessity for your business to launch, they are best avoided. They can be one of the biggest cost, as they often include deposit, upfront rent, refit/redecoration, making safe, secure & legally compliant.
Fixed costs / Overheads
It is best to cover the entire first year of trading in your calculation. You should include all recurrent costs such as mortgage repayments, bills, insurance, wages and associated taxes.
Contingency
It is always best to plan for the unexpected. This can be a contingency fund for unforeseen events, but it can also serve to cover some of the overheads you may not have accounted for. For example, when hiring staff, you not only have to pay for their wages and associated taxes, you will also have to account for job adverts, training, equipment such as uniforms, computer, etc.
Financing your Startup
Now you have calculated your startup costs, you will have to focus on getting the financing. There are many possible options:
- Savings / Personal borrowing
- Family & friends
- Outside investors
- Bank loans
- Grants – check Government Grant finder
Find out more on How to Finance your Company.