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The Overlooked Costs of Launching a Startup

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Oscar Waterworth
The Overlooked Costs of Launching a Startup

Today, there are more startups and small businesses than ever in recorded history. Because of this, a lot of people would assume that this is something everyone knows how to do. Unfortunately, the statistic of 9 out of 10 startups resulting in failure states otherwise.

Reasons behind such an astounding failure rate are many. Some of them include insufficiently developed business plans, failures to conduct a proper market research, and inability to make an idea appealing to the customer base. However, probably the greatest one is overlooking some of the costs of launching a startup.

Everyone can remember to count in the price of fees and taxes, the lease on the office space and the wages of the employees. Still, this is not all you need to consider. In order to get a better fighting chance and avoid the unfortunate turn of events that new businesses face, here are few most commonly overlooked costs of launching a startup.

Investing in Software

If you expect to have 15 employees from the very start, you must know how many laptops, printers, and scanners your office needs. Unfortunately, most startups fail to take into account the price of the maintenance for so many devices.

Continuing, there are the costs of the digital tools. For 15 laptops, just the price of a basic software like MS Office and an adequate antivirus can be a considerable sum. Furthermore, you may need to outsource some of your IT services, which means you would have to make yet another investment.

Repairs and Replacements

Gathering just enough money to get you going is never a wise choice. Even with the most careful selection of equipment and the utmost care of your staff, things sometimes go south.

The equipment will often break or start malfunctioning and you will have to either repair or replace it. Failure to do so can set your business back significantly. The smart way to go about this is to setup a side account with money meant solely for that purpose, and never dip into it unless absolutely necessary.

Offering a Guarantee

As we already mentioned, almost every business niche is oversaturated with startups. Seeing how they pop up seemingly out of nowhere, there is a fat chance your clients won’t trust you enough to give you a major project.

In order to assure them, you need to make a proper guarantee and one of the ways to do so is through surety bonds. In this way, your clients will know that even if your business fails to meet its obligation, they will be properly compensated (full refund plus legal costs). This is one of the things you plan never to use but is always good to have around. So, take a look at the cost of surety bonds and plan out your expenses beforehand.

Utilities 

The more people you hire the larger office you need. While everyone knows that this determines the price of the lease, sometimes startups tend to forget it affects the price of the utilities as well. A bigger office space needs more light and a potent heating system, while a large number of appliances consume a lot of power on their own. The water bill isn’t to be underestimated either. 

Training 

While working on a tight budget, you will not be able to offer impressive paychecks to new employees, which automatically means you will not have the privilege of being too picky when hiring.

Instead of hiring star employees, you will have to mold them and this takes both time and resources. This takes into account personal supervision (and we know that the time is money), paying for courses, instructors, and seminars. All in all, training is too great an expense to be overlooked.

Many Hurdles Ahead 

As a new business owner, you will probably be preoccupied with things like attracting investors or closing your first deal. Therefore, it is easy to imagine how easy it is for some of these expenses to slip your mind. However, not everyone is made to be a businessman.

If you believe you have what it takes, you need to be ready to apprehend all these problems at the same time. After all, the launch is the easy part, what comes next is much more complex. Good luck! 

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Oscar Waterworth
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