![]() ![]() However, if your profit margins are on the low side (less than 10%), you might want to adjust your marketing budget down until those numbers improve. The SBA advises limiting your marketing expenses to 7% or 8% of your revenue. But you have to be careful not to overdo it on marketing and advertising expenses-especially as a new company. Getting the word out about your business is essential. Marketing and Advertising (Up to 7%–8% of Revenue) If you wanted to keep 10% of that number available to sell to customers, you’d need to purchase $7,500 in inventory. Let’s say you plan to sell $75,000 in inventory over the next year. Then, divide that number by 10, aiming to keep 10% of your annual inventory needs in stock. To estimate potential inventory costs, start by figuring out how much product you expect to sell in a 12-month period. Initially, it can be hard to gauge how much your business will spend in this category. Most businesses that require inventory spend between 25% to 35% of their operational budgets on related costs. But the actual amount your business needs to spend here depends on numerous factors. Inventory costs can require a significant financial investment. If your company plans to sell products to its customers, you’ll need to have some inventory on hand to fulfill orders. Inventory (25%–35% of Operational Budget) The larger your office space and the more employees your business has, the higher its utility costs may climb. For commercial buildings, the average utility cost is $2.14 per square foot, according to Building Owners and Managers Association International. On top of a monthly lease or loan payment for office space, you need to prepare for the added expense of utility services. Yet in high-cost areas like San Francisco or New York, your monthly office space cost could be over $1,230 per person. The cost of office space starts around $300 per month (per employee). The size of your office will of course influence the price you pay as well. Just like residential rent and mortgage costs, the price of securing office space for your business has a lot to do with your location. But if your company requires office space, the cost of renting or buying a facility can add up. With certain types of businesses, you might be able to operate from your home. Office Space ($300–$1,230 per Month, per Employee) Support for other businesses (administrative or janitorial): $11,000. ![]() Warehousing and transportation: $16,000.Other types of businesses may have much more demanding equipment needs that could cost tens or even hundreds of thousands of dollars.īelow is a look at sample startup equipment costs for several different types of industries. Even online microbusinesses need access to a computer or device and an internet connection. Regardless of your type of business, it probably needs some type of equipment to operate. A more detailed and personalized project by comparison could cost at least $30,000. ![]() High-level market overviews might cost a few hundred to a few thousand dollars. The price of market research can vary depending on the type of report and guidance you require. However, hiring a professional market research firm could give you a clearer picture of the industry, your target customers and your competition. Some entrepreneurs attempt to do this research on their own. Researching the market you plan to enter puts your business in a better position to succeed. However, filing fees and other associated costs can differ based on the state where you operate. ![]() The average cost to register a business is $145. General business structure choices include: One of the first tasks you’ll need to complete when you form a new business is choosing a business entity. Go through the common business startup costs below to determine which expenses your business might encounter. This extra preparation on the front end can lead to more realistic expectations and better long-term results for your new business endeavor. Taking the time to write out (and add up) your initial startup costs is a smart move. Small Business Administration (SBA) provides free guidance and sample worksheets you can use for both. A separate startup cost analysis can help you estimate your costs as well. With such a wide range of potential expenses, it’s helpful to start with a business plan. Other small business owners might need to come up with five figures (perhaps several times over) during their first year in operation. In some cases, you might be able to get a company off the ground with a few thousand dollars. There’s no set cost to start a business-many factors can impact your initial startup expenses. Via Ondeck's Website How to Calculate the Cost of Starting a Business ![]()
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