For small businesses, miscalculating or underestimating essential startup costs could cause your business to fail.
Costs to incorporate your new company, leasing new office space and the purchase of computer equipment and other hard assets are but a few of the most common, relatively-significant expenses associated with launching a new business.
Launching a new venture for most comes with lots of excitement, plus the hopes of building a viable business in the long term. The kind of business you may be able to pass on to your loved ones or perhaps sell for a big payday.
In the midst of all the joy of starting a new firm, in the planning phase, you might overlook some areas of expenditures that when left unplanned for can get in the way of success. Three of these often overlooked startup expenses are as follows:
Whether you plan to lease office space or work out of your home, I strongly recommend that you make plans to pay yourself on a regular basis. It is best to pay yourself a living wage, that is to say, a wage with which you can cover your personal obligations. You will also want to work into your financial projections and/or request for outside funding, payroll for any full-time or part-time employees you plan to bring on.
Marketing / Promotion
An often overlooked expense. I am a big believer in the whole idea of paid marketing. Perhaps its because I suck at peer-to-peer promotion. I am still not very sure how to generate a big enough buzz for a product or service, using just my network of friends. I promote every venture I am ever part of the old fashion way: by paying for radio spots, Facebook Ads, Twitter Ads, etc.
I encourage any entrepreneur to make provisions for a decent marketing budget when launching a new business or product within an existing business. Give yourself a fighting chance to get the word out about your new offering as quickly and sizeably as possible.
Research & Development
Some might not feel as strongly about this point as others. I guess the degree at which you think having an R&D budget is important depends on the type of business you are in or your unique circumstances. Here, I tend to go with the "R&D is important" crowd. As you grow your business, you will want to look for areas, unrelated to your core business, where you can add value to your existing line of products or develop some peripheral sources of revenue. For such exploratory endeavors, one can allocate a portion of their overall startup budget. You can use these funds to develop a new product line or to buy the assets of a competitor.