Ideation results in a startup however for that startup to become a profitable business, there are more factors to be considered.
Startup cost is the financial involvement of setting a startup. This requires detailed planning and execution, to avoid spending on unnecessary things and ensure everything spent on can be accounted for.
Startup cost covers all expenses from the office space to furnishing, to bills, acquired licenses, employers hired, and even their salary for at least the first three months if you need employers.
As there are various businesses, so also are there various business approaches. Different startups require varying startup costs.
So as a startup owner, understudy your startup diligently and know what your startup cost would be. It is important to note that some of these expenses can be one-time expenses while others are recurring.
Hence adequate provisions should be made to cover both types of startup costs. Below are some of the things startup costs will involve:
This is one of the earliest expenses a startup makes. Market research to understand the viability of the product or service the startup intends to offer.
Some startups use independent research bodies to research while others do it themselves or recruit people to work alongside them for the research.
Every startup is most likely to spend on this with exceptions. Startups need office space to conduct their business.
Depending on the startup budget, the startup founder(s) can decide to lease office space or pay for a shared workspace.
Startup Equipment and Supplies
At the level where the startup is still at, it is advisable that only indispensable equipment are to be purchased.
Also, in making the purchase decision identify ones that can be gotten on lease at the moment.
The conclusion of the whole matter is to spend on only equipment that is required.
This covers all advertisement and marketing strategies required to introduce the startup products or services to the market.
These promotions can be both online and offline to ensure enough traction is garnered for the startup. Most times, advertisement agencies are used for this purpose.
Unless there is a skilled employer to handle the advertisement from within, it is advisable to outsource.
Startup founders include this in their startup costs as they need to employ people to help them run some aspects of the business.
Notwithstanding that the startup is yet to start making profits, the payroll must roll out payments to hired staff.
Sometimes, due to the overall capacity of some employees, the startup owner can decide to give startup equity as compensation for the staff they can’t afford to pay according to their full salary scale.
Registration and Licensing Fee
This includes permit fees, license fees, and other regulatory body fees startups need to register with before they can start operations.
Set aside emergency funds that can come in handy as the startup conducts its business.
These are a few startup costs to be looked out for. Also, amongst expenses identify and separate assets.
This is for tax purposes, talk to an accountant to help accurately sort out the startup financials.
Have a clear view of the startup cost, investors compare these things before funding a startup.
A well-detailed startup cost in a business plan shows one is prepared for the business ahead.
Don’t miss important articles during the week. Subscribe to techbuild.africa weekly digest for updates.