What Kind of Start Up Fees are There?
When you decide to go into business for yourself do not give into temptation and start off by buying a new office with new furniture and equipment in the most expensive area in town. At least wait a little while for the business to succeed enough before you do. There will be plenty of time in the future with any healthy business when it grows to a certain point where upgrades to computers, office furniture and more will be perfectly acceptable. But, to start a business you want to be sure your first investments go towards the basic building blocks of any successful business.
What is Essential to a Business Budget?
First and foremost, you will need to put money towards any license fees necessary for your specific line of work. After that, insurance runs a very close second. In fact, just about any business will be required to carry some amount of liability insurance by law.
This is to protect you, the business itself, employees and customers. It may be a little disappointing to think of having to hold off on a trip to the furniture shop to purchase those new desks you were hoping for. But, if the office you plan on renting has some used furniture you can make do with it until the business starts to make a profit.
The reason for this should be clear. Many businesses take time to grow into successful outfits. As a business owner you will also need to learn the ropes of running a small company. Even if you are an expert in your current field which is why you felt confident striking out on your own, there is still a lot to learn when functioning day to day on the job.
This can cost money in terms of mistakes made and lessons learned. It pays to start out as economically as possible. Then, when the business does start to show signs of growth you can go ahead and upgrade to better furniture, company cars, or even a larger storefront or office space.
In order to ensure the success of any kind of company, it needs to be properly indemnified right from the start. This is why liability insurance should be the first start up fee you look at putting into your business budget. Understand that insurance for a company is somewhat of an investment in that company. If something unexpected were to occur, especially something like a fire, a sudden illness or injury, or a theft, it could put your entire company out.
No matter how many lines of credit you are able to start your business with, and no matter how many assets your company has, a lawsuit could wipe out your business's finances, too. With the correct insurance in place, these sorts of issues would be covered and your business would be able to continue to grow. Make a solid insurance policy a top priority for your start-up costs.
What about Equipment and Employees?
The lower the expenses your business carries at the start, the better its chances of succeeding will be. If you do decide to hire a few employees early on, be certain to get workman's compensation coverage in place. As for furniture, equipment and office space, consider any low-cost alternatives first.
Do not use up all of your business's credit to buy everything new at the start. Put your time and money into building the business economically first. Share office space, borrow furniture and so on. Once the business proves itself successful and you have finished paying start up fees, you can always move up to bigger and better things.
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