How much to start a business? This is a question that potential business owners find themselves asking when they are looking to turn their dreams into a reality. Business startup costs do vary from person to person, but there are several core costs that come with almost any startup venture. We’re going to outline a few broad categories that will help you see just how much money you need.
Advertising and Promotions
Your new business needs to be fiercely competitive to survive. You should plan on setting aside at least 10% of your total business budget for marketing until you establish yourself. Once you do, you can scale this back to between 2% and 5%.
Employee Costs
Employee wages are a key expense for your start-up, whether you employ one or two people or 50. In order to ensure you have enough resources to retain your employee’s services, set aside at least 25% of your total budget. You may want to set aside up to 50% in case your business is slow to start. This way, you won’t have to scramble to come up with the payroll.
Utilities
Your utility costs will vary depending on your location and how well-maintained the building is. However, a good rule of thumb is to set aside around $2 for every square foot of office space each month. So, if you had a 500 square foot space, you’d set aside $1,000 per month for utilities.
Equipment
If you have to purchase equipment for your business, this is going to take up a large chunk of your startup’s budget. Your total costs will depend on the type of equipment you need, and how much of it. Most startups spend between $10,000 to $125,000 on equipment for their businesses.
Inventory
For businesses planning on selling items, you’ll need to have cash available to purchase your inventory. This means you’ll need to put between 17% and 25% of your total startup budget aside for your inventory costs.
Taxes
Taxes are going to be big every year, and you will have to pay them on time to avoid late fees and penalties. In Australia, all businesses have a Federal tax rate of 30% applied to their taxable income. If your startup is classed as a “small business”, this rate drops down to 27.5%. You need to keep an eye on these rates because they can change from year to year.
Office Space
Your employees will need office space in which to work, and this is another category that can vary widely from one business to the next. Your office space costs start at around $100 per employee per month, up to about $1,000 per month.
Contact Cigno Business Solutions Today!
If you’re thinking of starting up your own business and you’re still not sure how much to start a business, get in touch! We’re happy to help you plan it out from start to finish!
