Costs to Consider When Starting a Business

Many businesses are started because they were a lifelong dream for an entrepreneur. Maybe even a passion. Sometimes, people just start a business in a desperate bid to make some money. Whatever your reasons are, you need to keep in mind that it will take a bit of money before you can begin to make money.

To that end, when you are coming up with your business plan, there are a few costs that might not come to mind immediately, but they need to be carefully considered anyway. Knowing all of the expenses that are involved can not only help you get your business off the ground, but can also give you a better chance of making that business a success.

Types of Costs

The U.S. Small Business Administration says that there are a variety of types of expenditures to take into consideration when you want to start a business. You will need to have the ability to differentiate between these costs if you want to properly handle the cash flow of your business in both the short and the long term. A few of those types of expenses include:

· One Time Costs
· Ongoing Costs
· Essential Costs
· Optional Costs
· Fixed Costs
· Variable Costs


This can be categorized under ongoing costs. Overhead can be described as what it costs to run a business. This can include rent for a location, the wages you pay any employees, the cost of merchandise, and even your utilities. You might need to pay close attention to things like who your electricity provider is, which locations would give you better access to your clients for the cost of the rent, and other things of this nature. However, it is also important to know that in most cases, overhead can also be claimed on the taxes for the business.


When you are building a business, it is also important to look at your staffing needs. You don’t want to pay your employees a pittance and expect them to move mountains, but you might not have a huge budget either. There are ways to deal with this though. One way is to pay your employees well and then they will be more motivated to make the business a success. At the same time, consider offering internships to a few college students who could benefit from the experience while you get some of the less demanding chores taken care of. You might also consider outsourcing or hire freelancers to do some things.


Before you decide to begin any type of business, you should research the consumer makeup and the industry very carefully. Sometimes, people who are looking to begin a business will hire firms that specialize in market research to aid them in this process of assessment. Business owners who are going to do this, need to figure the research expenses and fees into their business plan.

Permits, Licenses, and Insurance

In most places in the U.S., businesses will need to get various inspections and authorizations as well as obtain certain business permits and licenses. Some businesses will only require basic licensing, while other business might need licenses that are specific to their industry. The costs for all of these things will vary depending on the type needed as well as the state where the business is located.

Supplies and Equipment

No matter what type of business it is that you are looking to start, you will need some sort of basic supplies and equipment. Before you add the cost of equipment to your budget, you need to make a decision regarding how you will obtain this equipment. Will you buy it outright or will you lease it? The state of your finances will be a determining factor in this decision. Even if you are flush enough to purchase the equipment outright, expenses that can’t be avoided might mean that leasing is the more attractive option.

With that being said, it is also critical to keep in mind that whatever your financial position might be, leasing is not always going to be the best option either and this will depend on the kind of equipment you plan to lease as well as the terms of the lease.

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