As a new business owner, you could have dedication, drive and determination to make your business successful and flourish. However, if it’s not backed up with impeccable cash flow management, you could lose your business within the first year of launching. It’s an unfortunate reality that a little over 80% of small businesses fail because of their cash flow problems. This is by no means to steer you away from chasing your dreams and endeavors of opening a business. Our intention is to motivate you to know the facts and do the research needed. About 60% of small business owners say they don’t know much about accounting, which is why you should know what the true cost of a startup is.
We don’t want you to stumble through every aspect with your startup business; we want you to thrive. Again, the only way to thrive is by knowing what the true costs of a startup is with all the common expected and unexpected expenses.
Common Expected Expenses
In every aspect of life, there will always be the expected and unexpected factors. A startup is no different. We will begin with the common expected expenses of what makes for the true cost of a startup (in no particular order):
- Incorporation Fee: Under $400 CAD
- Office Space: $133.54 – $1335.40 CAD
- Website: Approximately $33.28 CAD/monthly
- Equipment Costs: $13353.95 – $166924.38 CAD
- Utilities: Approximately $2.67/per square foot
- Inventory: Up to 25% of your budget
- Marketing: UP to 10% of your budget
- Furniture & Office Supplies: 10% of your total budget
- Payroll: 25-50% of your total budget
Added items include:
It is wise to take into account that each industry and business is different. While these estimates may not be true for every startup, it’s easy to see that these items tacked on to one another. Seeing these figures may be daunting or relieving to you. Whatever the case is for you, know that your startup must be scalable. Do not forget any item on this list, especially payroll.
What Are The “Unexpected” Expenses
That Make Up The True Cost Of A Startup?
The section above is full of the expected and necessary items you need to run a successful startup. When we speak about the unexpected expenses, we aren’t solely referencing to how much you should have for your petty cash fund (although that is important to add to your “must-have” startup list). We are referencing items that are typically neglected, forgotten, or hidden. However, they are necessities to develop a flourishing startup company. You must take each of them into account for your startup budget.
What are these “hidden” and “unexpected” necessities that make up the true cost of a startup? We’re glad you asked:
- Late Payments
You cannot afford to have a financial setback with a startup. This means that if you are only managing yourself for some time, you need to be laser focused to stick to your budget and account for every aspect of your business. Do not let anything in your company, let alone your financial management, fall to the wayside. As a business owner, the key to be a successful leader is to know thyself. Know your financial state, know when you are beginning to feel burnt out, and know that it may be time to call a bookkeeper and/or accountant.
At Steph’s Books, we offer exceptional services to help businesses at any state. We know the true cost of a startup and can analyze your books to see what areas need maintenance and what areas need extra TLC. We’ll be happy to answer any questions about the common or hidden expenses that may be required for your specific business to grow. Call us today to find out more!