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The Difference Between Essential & Non-Essential Startup Costs

One of the biggest ways that startup businesses waste money is by purchasing non-essential items and services when starting up a new business. This can be the difference between getting going properly and not surviving the first year or two.

It is important to be able to properly assess whether or not something is needed and this may vary from business to business. This article will list the major essential and non essential startup costs that every first time entrepreneur should know.

1- Premises

Are premises essential for every start-up, the answer is no. But how to decide if you need a dedicated business address. If you are running a business that is industrial in nature, requires storage space for quantities of stock or if your customers have to visit you at your place of work for meeting or purchases.

If your business can be run online or is essentially centered around you as a person or your skill-set then you should consider starting with a home office, at least at first and be aware of the tax relief you can claim working from home.

2- Staffing

If you need staff, and some businesses definitely do, then it’s important to think carefully about a few factors involved in this. Firstly do you need trained and/or specialist staff? If so then you’ll need to compensate them to a decent level but if it’s work that anyone can do such as cleaning cars or manning a till in a shop then you can get cheaper part-time or temporary workers which are much easier to replace.

Also, consider how much of the work can be done by yourself saving cash but if you would be best utilized by going out and getting more business or doing other things maybe it is actually the most cost-effective plan, long-term, to hire.

3- Utilities

For most businesses an internet connection is a must. You should shop around for the best deal on utilities like this, it is easy to do, just visit to check what you can get from different providers. If you are using part of your home as an office then you can claim back an amount of the cost of running the home as a tax-deductible business expense.

4- Vehicles

You may or may not need dedicated vehicles for the business, but no doubt you’ll need to get around one way or another. You can use your private vehicle and claim back mileage costs, and even have your employees do the same, this will save on big costs in the early days.

But if you do need vehicles, for the transport of goods etc then it’s important to get the best deal, consider leasing as well as purchasing as this can make the costs lower at first although you won’t own the asset.

5- Advertising

Do you need to advertise? You may have enough industry contacts to be able to get contracts and work without it. But if you are needing to get custom from members of the pubic then it’s going to be key to have a marketing strategy, a lot of this is online these days, you should get a good SEO specialist if you want to be found online and take full advantage of social media to connect with potential customers.

The Bottom Line:

Turning a startup into a profitable business requires a fool proof business plan that is focused on cutting costs and increasing profitability. I hope the above list will help you develop a business plan that will lead your startup towards success.

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