The Cost Of A Start-Up | How to keep business costs down, right from the beginning
When starting a new business, like many things in life, there is no substitute for preparation and planning.
One of the most important considerations for any aspiring business owner is costs. Both general start-up costs, and legal costs – these are both important factors when planning a budget for your new business. In my experience, proper planning can help keep costs down right from the start.
The reality is that there is so much to do when starting your new business. There is so much to know, and let’s be honest, there’s so much we don’t know! Here are my tips for what to focus on when starting your new business and how to keep business costs down early on.
Business start-up legal advice
Yep, you got it in one! You need to prioritise business start-up legal advice. This is not a ‘nice to have’ in my view. Without it, you are flying blind and it may end up costing you a whole lot more in the long run (when you need to come back to your lawyer for advice to help you out of a tricky situation that could have been avoided if you had that business start-up legal advice early on!).
Getting your business lawyer on board as early as possible will help you develop a road map for your new business. Your business start-up legal advice will be able to help clarify the direction you need to take in terms of business structure, legal compliance and legal documents. Without these, you are not only leaving your business exposed, you may not be complying with your legal obligations as a business owner - and that’s risky!
The best way to dive in and get your business start-up legal advice is, in my view, by having a strategy session with your business lawyer. These fees vary amongst lawyers. For example, to book in for one of my tailored strategy sessions the fees start at $725 + GST for the session.
Business structure and set up
Depending on what your business structure is, you may have incorporation costs. The incorporation costs for a company (which includes both ASIC and legal/accounting to help you set up) could be up to $2,000 + GST (which ought to include ASIC incorporation fees). Taking the time to obtain several quotes will allow you to make a commercial decision that is right for your business.
Note here – to help keep costs down, be sure you are clear on exactly what you are getting for this fee. This fee should include your company register of documents that you are required to maintain, and this should include your company constitution. If you don’t take the time to be clear on this, it may end up costing you more later when you need to engage a professional to develop these documents for you.
Business name registration and domain name registration
These costs include statutory costs for the business name, and fees charged by your domain provider. You can jump online and get these estimates quickly and easily and you can then include these in your budget.
By now you will know that you need an ABN (Australian Business Number) regardless of your business structure, you can apply for this now. Getting this done at this stage will save you the costs of seeking assistance to get this sorted later.
Insurances and licences
These are industry specific. As part of your new business planning, and no doubt as covered in your business start-up legal advice, you need to be proactive with understanding your insurance requirements and needs, and licencing obligations. Taking the time to obtain several quotes so you can make a commercial decision as to what best suits your business will help keep your costs down at this early stage. Waiting until you are a little further down the track and under pressure to get these in place ASAP can mean you won’t have an opportunity to obtain multiple quotes, and this can increase your start-up costs.
Subscriptions
Accounting software subscriptions; industry specific software; workflow management (such as Monday.com; ClickUp, Asana etc) all have a cost attached to them. Take the time to be clear on what your immediate needs are, so you can plan for these expenses. Some of these may be able to wait, others (such as your accounting software) may not. Knowing what you need, and when, will help keep your costs down early on.
Branding and Marketing
Any new business will need to have a sound marketing strategy developed early on, and in my experience, this usually involves developing a brand for the new business. As I have said above, taking the time to obtain several quotes will allow you to make a commercial decision that suits you and your business. In addition to obtaining quotes, proper planning will give you the time you need to properly brief a designer and/or marketing consultant, so you are able to ‘do it once, do it right’. Trust me, you don’t want to rush this process and miss something important, or worse, end up with a brand or marketing plan that doesn't serve you and your business. If that happens, you will need to repeat this process down the track, and that is another cost.
In my experience, new business owners who take the time to get their branding and marketing advice right, early on, are able to keep their costs down, and are able to move forward in their business with clarity and confidence.
From here, other set-up costs may include cost of leasing premises; fit-out costs; equipment, salaries and so on. Being crystal clear on what you need to do, and in what order, can be a game changer not only in being able to build solid foundations for success, but in keeping your costs down as much as possible early on. And you guessed it! The best way to start off, in my view, is by diving in and getting your business start-up legal advice as early as you possibly can.
Good luck, and happy business building!
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If you found this article helpful, you might like to read more in our resource Legal Advice for Small Business: The Ultimate Guide.