Building a startup indeed seems like the dream of most millennials. Most people want to work independently and not be limited by binding office regulations. However, on the other hand, running a start-up business is not as easy as you might think.
Many things and obstacles must be faced by entrepreneurs, such as finding capital and business strategies that need to be carried out. Wrong control of finances and business strategy, might make your business fall and encounter loss. Most startups even have to swallow the bitter pill and be out of business within their first two years.
Capital in the form of money is needed when you want to start a business. And knowing how much capital you have and what is needed to start a business is very important. Thus, doing initial cost planning in business can benefit your business more than having no plan at all. One of the strengths of an entrepreneur is having a great deal of knowledge about start-up costs.
Before you set yourself up to become an entrepreneur and open your own startup, it’s a good idea to think about some of the costs that must be covered before opening the business. Let’s review each expense, one by one!
1. Business Equipment
All types of businesses will need business equipment. Even when you run an online business, you must have several devices to run your business, for example, a laptop or smartphone for communication tools, paper, stationary, and many others. These things seem trivial, but they are crucial if you pay attention to them.
You will also need to make a list of what you need, and calculate this as your expenses. Try to make a list of what items are needed. You should utilize Excel when calculating all of this to avoid hassle or miscounting.
2. Office Space
At some point, your business will grow and expand. Expansion itself is one of the growth standards for a startup. With proper office space, you can freely develop your business with your colleagues and other employees.
3. Legal Fees & Tax
Employers need lawyers and notaries to help deal with common legal issues and the cost. For example, the formation and merger of businesses. Legal costs are also required to protect the company’s intellectual property rights to do business.
It is important to have protection and help from lawyers and notaries to manage legal obstacles, but unfortunately the costs of lawyers and notaries are not cheap. Thus the legal fees can add up quickly over time, and if you don’t make thorough calculations, it can be burdensome even before your business reaches its peak of success.
In addition to legal issues, taxation is also something that needs to be considered by entrepreneurs. The amount of tax that must be paid usually surprises you. Thus, the startup should take advantage of all available tax deductions to lower the tax bill. A startup also needs to have a tax strategy, and maximize the amount of money that must be reinvested each year.
To work around this, startup owners may need professional accounting services in Singapore to help around the legal financing.
4. Marketing & Promotional
The most important aspect of introducing your business is the right marketing strategy. Thus, you must create business cards, banners, and several other marketing tools. In addition, you can also set a budget for advertising, digital marketing ads, and many other marketing strategies.
When you have just started you may think that you should set a lot of budget for marketing and promotion, but this is not entirely true. You should have around 10-15 percent of the budget for total marketing costs. Moreover, in this current time, utilizing social media properly is the best thing you can do to reach your target audience massively even with minimum spending.
Don’t forget to keep a record of every expense that occurs, even if the value is small. Each expense will affect the costs that have been planned and the financial statements. After calculating your expenses, you can know whether you have enough funds to cover your business building as well as how much reserve cash you have to cover for the initial months. Because the truth is your startup won’t generate profit right away, thus you need to have reserve cash to cover costs and expenses at least for the whole year.