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Start-Up Costs to Consider as a New Business Owner

by BBB Staff BBB Staff | Aug 31, 2021 12:00:00 PM

Choosing to go into business for yourself is exciting – it's your opportunity to build a better product or bring unique services to the public. When creating your business plan, especially if you're in a position to raise capital to open, it's critical to be aware of out-of-the-ordinary start-up costs associated with setting up shop.

Professional Consultants 

Many small business owners plan to do everything themselves, but professional assistance can take some of the weight off an owner's shoulders. More importantly, financial and legal advice can save a small business owner time, money, and even protect from a worst-case scenario.

While you may be an expert in the field of your new business, that field may not be accounting. Hiring an expert to reconcile business expenses, pay bills on time, and ensure that taxes are collected and paid properly can keep you out of financial hot water.

Professional advice isn't limited to the financial realm. If you're planning to hire employees, consider retaining services of an employment lawyer or HR consultant. These folks can help keep you abreast of proper wage and employment laws in your state, update you on federal hiring regulations, and make recommendations when an employee becomes a problem.

For these needs, an HR consulting firm should work fine. Many of the best HR firms have their own employment lawyers on staff. Expect to pay regular fees to a bookkeeper and a retainer or hourly costs for HR consulting or an employment lawyer.

Web Presence

Going online isn't an option for a new business - it's a necessity. Expect to spend money for a website host, web design, site maintenance, and online security. If you're taking payments from your website, ensure you have premium security to avoid compromising your customers' data. A strong online presence makes a big first impression, especially when you're new and building your brand.

Beyond this, 97 percent of customers visiting your website for the first time aren't going there to buy – even if you're an exclusively online business. Savvy shoppers – 81 percent of them - use their computers or smartphones to compare products and services online before committing to a purchase.

This makes your web hosting, web design, and user experience important, especially as small businesses don't have the brand recognition and larger marketing budgets that regional companies enjoy. Expect to spend more than you anticipated for a premium online user experience. 

Hiring Costs

Unless you're planning to run your business solo or as a partnership with one or two others, you'll need to hire staff. Expect to spend money advertising for open positions, as well as background and employment history checks for your top candidates. An HR consulting firm can take a lot of the busywork off a small business owner's plate, as well as conduct reference checks and the like in compliance with fair hiring practices. Businesses who choose to have pre-employment drug screening (some types of business licenses require this) should expect to have higher costs at the outset since you'll be testing multiple employees at once.

Hiring an HR consultant at the startup to get you staffed isn't just about expertise in recruiting, interviewing, researching candidates, and filling out employment paperwork properly – although these are all important. These things take a lot of time, and for a new company, time is money. Consider if it's worth hiring a consultant for around $1000 to take care of initial staffing, instead of taking time each day to address the hiring process.


Each business has different requirements for insurance coverage. Construction companies, medical practice, and restaurants tend to have higher coverage requirements, due to the nature of the business. Workers’ comp, malpractice, and liability insurance (in case a lawsuit-happy customer slips on your floor) are all important. Purchasing the initial premium may be a lot more than the monthly costs you've worked into your business plan.

In addition to the insurance coverage required for your business license, consider supplemental insurance. Contractors, for instance, can benefit from additional coverage, as potential injuries could cost more than the standard premium. Your business may be small enough that you won't be required to offer health insurance for employees, but if you plan to grow, be sure to keep this upfront cost in mind for budgeting in future years.

Inventory, leasing fees, rent, and general overhead costs are all typical for a small business opening. To ensure that yours is a success, don't neglect these lesser-known start-up expenses.

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