One of the most important factors to consider before fully committing to starting a brand-new business is its feasibility. It’s crucial to ask yourself if you can financially support the business venture—especially at the start—while factoring whether or not it is worth your money and time to maintain. This is important because many companies that fail right after starting are not feasible, to begin with. Various factors play a role in this, from workload, finances, and more.
Is your business idea a feasible one? You will know that by understanding the cost of running your business. This article will outline the various costs you need to think about to help you know whether your business is feasible.
One of the costs you will need to consider, especially if you are borrowing money to fund your business, is the loan costs. Different business loans come with different amounts and rates, and you must understand these rates to understand how much you are paying in total.
Also, do note the penalties that may follow if you default or change loans, as it can help you plan in case changes are made.
When it comes to locational costs, it leans towards where you will set up your shop in a physical location. The costs that revolve around this include rent, utilities, and other such location-based expenditures. Aside from that, to maintain that building, you will need to consider other costs, such as equipment, maintenance, and other things that help maintain the upkeep of your storefront.
Note that if you are going digital, these types of costs will generally not apply.
To get your business in front of your target audience, you will need some form of marketing. However, marketing is not free—and there will be numerous costs associated with it. Such costs include the money spent on creating websites, advertisements, images, brands, and SEO strategies, among other things. These can either be done in-house or done by third parties.
Generally, the cheaper route is to outsource to a digital agency to do them—as you pay for all that you need in one package rather than having to hire individuals to work on specific needs.
You will need some equipment and technology to run your business—and depending on the type of startup you are running, these costs can vary. For instance, if you are running a restaurant, you will have to invest in kitchen equipment. On the other hand, if you are running a digital company selling products, you will need computers, software, internet, and the particular products you’re selling.
Your employees also count as cost, as you will need to pay for their benefits and wages. Beyond that, you can expect to pay for costs like first aid kits, insurance, training, uniforms, tools, and many other things your employee needs to work for you.
You will also have to take many other particular costs into account, such as registration costs or legal fees, that you will need to consider when determining the feasibility of your business. That said, thoroughly knowing these costs can prove quite a challenge, especially if you have little to no experience in the industry. For that reason, it pays to work with an accounting expert to come up with a list of costs you can expect, along with roughly how much you are expected to spend. This way, you can judge for yourself if the business is worth going after or if you need to look into another avenue for better opportunities!
The ECommerce Accountant is a business advisory service offering assistance to influencers and online stores to maximise their online performance and control their finances. If you need eCommerce accounting services to help start your business on the right foot in Australia, work with us today!