There are a lot of start up costs that can’t be easily categorized. You still need to consider them to get an accurate idea of the cost of starting your new business. There is more to business than the obvious, and if you fail to attend to the less obvious points this could make for a considerable expense at a later date. You can’t just “hang your shingle” and expect everything to run smoothly, this is a fact that is stressed throughout many sources that list start up costs for new business. Unanticipated expenses can wreak havoc on both personal and business finances. The best advice is to be thorough and have realistic expectations. Let’s examine a short selection of expenses that are not easily categorized.
1.Wardrobe: You new business needs to have a leader who has the image that goes with the professional role that you must play. Being an entrepreneur is more than just being a practicing professional, or an employee, and the different expectations can sometimes demand a different wardrobe that reflects the upwardly mobile professionalism that you want to project to clients, workers, customers, and other professionals. Think seriously about the image that you want to project to your public. Business casual is not usually appropriate, and unfortunately the cost of equipping yourself for your new business is not tax deductible.
2.Transportation: Consider potential changes to your traveling needs. If you are visiting prospects, remember that gas prices are rapidly rising. Do you have a vehicle that is capable of carrying the necessary equipment or products? What if you need to take clients or other professionals out to lunch? You may need to either consider purchasing a company car, or remember to have your own personal vehicle detailed to be more publicly presentable.
3.Deposits: You will probably be required to make deposits on various utilities and with the telephone company. The utilities company should be able to provide an estimate based on the type of business you plan to run, and some estimates could be significant depending on your business. If you plan to open a telemarketing company, the telephone company will expect a high usage deposit that can be significant.
4.Filing Fees: Will you be filing a DBA, “doing business as,” also known as “assumed name”? Laws vary from county to county, as well as from state to state. Your bank will likely require this if you are going to be depositing checks made out to the company name rather than to your personal name.
5.Licenses and Permits: These are all fees charged by local, state, and federal branches of the government. Some industries are highly regulated by one or more government agencies; in these industries, license and permit fees can be astronomical in comparison to less regulated industries. For example, any company that is regulated by the Food and Drug Administration, for example a medical software company, will have higher fees than your run of the mill retail clothing store.
6.Miscellaneous and Unanticipated Expenses: A good rule is to compute unanticipated expenses as 10% of the total start up cost. Miscellaneous expenses are the catchall for the cash needs that do not fit into other categories. There may be several items on your list of miscellaneous expenses, depending on the type of business you plan to run. Figure in a cash cushion to cope with these costs.
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