Owning and operating a small business can be one of the most satisfying things you can do. Not only do you get to see your unique business ideas come to life, but you also get to turn a tidy profit, assuming your business is successful.
However, it can actually be quite a challenge to get your new business up and running for all the benefits of entrepreneurship. One of the biggest hurdles any small business faces in the early days is capital. Determining if you can start a business often comes down to whether or not you can realistically afford it.
Running A Business Can Cost More Than You Think
The prospect of turning your hobbies into a side hustle or full-fledged business can certainly be alluring. Taking something that interests you and developing it into a business that not only solves problems but lines your pockets at the same time can be a fantastic experience. But, it should be noted that even with a solid business plan and what you assume to be enough cash to get a business up and running, many factors play into exactly how much running a business will cost you.
Starting up a business already costs a significant amount of money in the form of overhead from stock and supplies and the cost of obtaining and maintaining either a brick-and-mortar store or an e-commerce website. If you do end up settling into a brick and mortar establishment, you have to consider how property taxes will affect you if you’ve purchased a building, how the rent will affect you if you’re leasing a space, and even how utility costs will play into how much you’ll be spending. Even something as simple as inadequate ventilation or poor insulation can seriously affect how much it costs to maintain your business every month.
Additionally, it would help if you considered the other hidden expenses of starting up your own small business. Things like business insurance, licenses, and professional fees can all quickly mount up and become much more of a financial burden on your fledgling business than you may have originally thought. At this point, you need to consider what is essential for you and the company at each step of the process. For example, something like e-commerce business insurance is essential throughout the life of your company and should never be put off. And the temptation to cut back on these expenses always rides, but the key is to be methodical every step of the way.
There are also the time costs associated with starting a new business, where you’ll likely dedicate nearly all of your time to making sure things are running smoothly, effectively reducing your ability to make money from other venues while trying to get the business up and running.
Go In With A Solid Understanding
However, you mustn’t let the prospective costs of starting up your own small business dissuade you from making that dream a reality. Think of going into business just like any other major decision you make in life, like moving to another state or purchasing a home. Sure, there will always be factors that make entrepreneurship seem scary or unfeasible, but that goes for anything worth doing in life. You can mitigate the risk by taking the time to educate yourself on every facet of what it takes to operate a business.
When choosing an area of the city to set up shop, look for neighborhoods that are prime candidates for economic revitalization. This not only sets up the community for success down the line but also puts your business in a position where they are capable of becoming an institution in an up-and-coming area. Additionally, by focusing on areas that are on the verge of becoming a hot commodity instead of angling for areas that are already experiencing an economic boost, you will be able to save a considerable amount of money on a brick-and-mortar establishment.
Take the time to fully budget out what you expect your expenses and cash flow to be in the first months of operation, then go in assuming that your initial budget will be less than what you actually need. Know your fixed and variable costs, your one-time versus ongoing costs, and what expenses are essential to getting your business running and not just optional. Going in armed with extensive knowledge of your own business and all tertiary factors will help you succeed in getting your small business off the ground.
Get Creative When Cutting Costs
While starting up your business and keeping it running smoothly does cost a good deal of money, there are many ways in which you can cut costs without sacrificing quality. For example, using efficient time strategies can reduce wasted work hours and boost profitability, shopping around for the best insurance deals and making sure that you aren’t covered where you don’t need it, and modernizing your marketing efforts are all simple ways to decrease costs.
You can also forgo a traditional brick-and-mortar business entirely, opting instead to explore the benefits of using a “cyber office.” This significantly reduces the costs associated with running your business as you don’t have a physical office to maintain or nearly as many supplies to purchase. In addition, modern cloud platforms allow a business to function entirely in a digital space without any compromise.
Whether you’re in a physical location or operate your business strictly online, your business can become more environmentally friendly, saving a huge amount of money. Environmental accountants can help you take advantage of tax benefits associated with running an environmentally friendly business and find budget-friendly ways to decrease environmental impact further.
At the end of the day, it is up to you whether or not starting up a small business is fiscally viable. However, if you take the time to educate yourself in ways to reduce overhead and operating costs, you might find that becoming an entrepreneur is easier than you may have originally thought.