To get your business off to a good start, it’s important to understand the major costs involved, and factor in all your start-up costs.
Start-up costs are one-off expenses required to set up your business and get it running. Different businesses will have different starting costs. These may include materials and equipment, logo design or website development.
How much money will I need to start my business?
Every business is different! To get an estimate, try answering the following three questions.
1. What are your major expenses?
Before you start your business, do some research on your business area or industry. Find information on your market, customers and production costs.
- Good research will help you work out the major expenses involved in running your business, such as materials, utilities (such as gas or electricity) or marketing (website, brochure, etc). Research will also help you plan your start-up costs – the amount of money you need to get your business up and running. You’ll also have a better idea of whether your product or service will be profitable.
- Until you start your business, it can be hard to know all of the expenses involved. Maybe talk to other people in similar businesses to get an idea of costs.
2. What are your start-up costs?
Start-up costs can be divided into:
- One-off costs – e.g. paying for a business logo or a permit
- Equipment – e.g. a computer, sewing machine or colour printer
- Money to run your business until you start to turn a profit , e.g. to buy stock, or pay market fees.
Some of the most common start-up costs for new small businesses are listed below. Work out which ones apply to your business.
Permits and licences
You may need to pay for licences, permits or insurance for your business, such as:
- vehicle registration
- licences; e.g., a liquor licence or council permits
- Food Handling or Responsible Service of Alcohol (RSA) certificates
- Insurance; e.g. public liability and contents insurance.
Marketing can help customers find your business, so think about including money for marketing in your set-up costs. Marketing expenses might include:
- graphic design (e.g. a business logo; flyer)
- advertising (print, online)
- setting up a website (design, web hosting, etc.)
Professional service fees
You might need to pay for professional services when setting up your business, such as
- legal advice
- bookkeeping, accounting or financial advice
- banking costs or loan fees
- internet and phone set-up
3. Have you allowed for a period of running costs?
New businesses can take time to make a profit. Allow for this by adding a period of your running costs into your start-up costs.
Business running costs can include:
- rent or lease
- utilities (e.g. water, electricity) and phone/internet
- buying stock
Get help in person
Attend a workshop
Business Victoria’s Starting Your Business Right workshop looks at the process of starting a business, and how to get set up properly. You’ll also get information about business resources and free mentoring.
Visit Business Victoria’s website
This article is adapted from the Business Victoria guide Calculate Your Costs to Start a Business, which contains links to further information.
The Australian Tax Office (ATO) has further information and a handy costing sheet to help you calculate your start-up costs.