Most people don’t understand the level of costs involved when starting a new business. With that in mind, we wanted to set the record straight once and for all. More than half of new companies fail within the first twelve months. That is believed to be a result of poor financial planning. So, it is critical that anyone planning to start a new venture next years does some research. The post you are reading today is a fantastic starting point from which you can expand your knowledge. At the end of the day, overlooking expenses could mean your business simply doesn’t have enough cash in the bank. That could spell the end of your corporate ambitions.
1. Premises Rental Costs
Some new business owners try to work from home for as long as possible. However, they all have to rent office space at some point. When working out how much you can afford to spend each month, you need to understand the rules and regulations. In the UK, company owners have to pay an extra tax that is referred to as business rates. That expense can fluctuate greatly, but it’s pretty low at the current time. You need to find out when the rates are going to change, so it doesn’t take you by surprise. Also, you’ll need to think about energy and insurance costs.
2. Accounting Services
Presuming you’ve just registered a private limited company, you’re going to need an accountant. Top professionals can charge astonishing rates for their services. So, you need to look for someone in the mid-range. Even then, you can expect to pay just over £100 every month for their services. So, you need to ensure you choose a competent expert with your company’s interests at heart. Some accountants are not interested in how well your business is doing so long as they’re getting paid. You need someone who will offer sound advice.
3. Supplier / Manufacturer Costs
Most suppliers and manufacturers won’t expect you to pay for their items upfront. Indeed, many will send an invoice at the end of each month. Even so, you need to ensure you have enough cash in the bank to cover that cost. Missing one payment could mean the supplier never wants to deal with your company again. It could leave you in a terrible position. That is especially the case if customers are still placing lots of orders.
4. Employee’s Wages
It might be possible to run a one-man show for a while, but you’ll need to employ other workers at some point. To guarantee you get people willing to go the extra mile, it makes sense to offer them a decent wage. Employers who only pay the minimum required amount will never get the best team. You can’t expect people to feel enthusiastic about their work when you pay them less than £10 per hour.
Considering all those costs should mean you don’t forget anything important. You should always try to keep as much cash in the business as possible. You never know when an unexpected payment request could cripple your operation. You also need to keep money aside for legal representation. There is every chance your company might go to court at some point in the future. You are sure to lose the case if you don’t have the best legal minds fighting your corner.