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Austin TX Business Law Blog

Tuesday, April 27, 2021

What Costs Should a Startup Plan For?

Have you come up with a great business startup idea? It can spark excitement like a few other things. The idea, however, is just the beginning. There are many steps to take before you can make it a reality. While dealing with financials is likely not as exciting as coming up with your great business idea, it is essential to building a successful business. Know what you are getting into before you start. Planning and execution of a financial plan for your startup can be crucial to its success. To do so, you will need to know what your projected costs will be. Here, we will discuss some of the essential costs you will need to plan for in your startup.

What Costs Should a Startup Plan For?

The question of how much does it cost to start a business is a central one to confront at the initial planning stages. It will play a key role in things like how much investment funds you will need at the start and as your business begins to develop more and more. Make your financial projections part of your plan. This section should include estimating your revenue streams and profits, as well as your projected expenses over the first several years of doing business. Some costs will be one-time expenses and others will be recurring. You will likely want to have around six months of expenses covered before you get started with your business. This should provide you enough cushion to get things off of the ground.

With pretty much any business, there will be equipment costs. What equipment you need and the costs associated with the equipment purchases will largely rest on the needs dictated by your business and the industry you are entering, as well as the projected size of your business operations. Financing equipment will most definitely need to be done right away.

Among other up-front costs of a business startup, you will need to pay incorporation fees once you have selected the type of business entity you want to form. Incorporating your business as a limited liability company means that you will need to file articles of incorporation with your state and pay the associated fee. Should you choose not to incorporate, you may still need to pay to apply for the necessary federal or state licenses or permits.

Renting an office space will also likely be something you need to do and will take up a significant portion of your fixed monthly costs. To reduce these costs, you may wish to consider working from home, although this is not practical or workable for many businesses. If you can manage it, it may be a good option.

You will also need to plan for expenses associated with marketing, including advertising and promotion costs. Marketing materials can be a significant cost, but also a great investment in your business’s future success. Develop a marketing plan and project the costs associated with executing that marketing plan. Do you want signs? Banners? Business cards? Are you considering paid advertisements? Giveaways? Be sure you have planned to cover these costs.

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For assistance in helping you set up your business for success, the Kumar Law Firm is here for you. Contact us today.


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