If you’ve found yourself reading this post, there has probably been a point in time when you’ve wanted to start up a business or you’ve tried and become lost with the expenditure element of the business.
Ultimately, we always say that planning before execution is key. The same goes with any objective you’re trying to hit in life… a goal without a plan is just a wish.
Therefore, today we’re going to take you through realistic logistics when looking at how much it costs to start a business. If you’re interested in making your business live and sustaining it over a long period of time, read on.
Don’t Go Overboard…
Especially if this is your first time investing in a start-up business, you do not want to be in debt and start all over again within the first few months of starting your company.
This is not to say that you can’t risk some of your savings by investing in start-up costs throughout the early stages of beginning your business. Using your funds in moderation is a must when building your profile.
Having a long term plan is key and you should avoid spending too much at the beginning of your journey rather than spending most of your budget for short-term success. Remember, a business is a marathon, not a sprint, so don’t lose motivation if your business doesn’t take off straight away!
Yes, the optimism of a new business can become quite overwhelming if you’re extremely passionate about your idea, product or service. However, getting too excited and putting all your money into it can certainly backfire if you’re not prepared to execute perfectly.
Plan Your Expenditure
Ensuring you don’t go overboard with your spending is good; however, planning it out to see what your expenditures will be is crucial to the health of your business.
Underestimating or even overestimating how much you’re going to spend has become a reality that we’ve seen in businesses over the years, and although their idea may have been excellent for the public, they couldn’t continue.
We recommend that you have an amount of savings that can cover your first few months of business.
Entrepreneurs altering prices that work, buying stock, or perfecting their service with no planning involved can bolster incredible results if they’re lucky, but it can also become a serious problem if you’re not prepared for the consequences.
Every little detail needs to be taken into account, as money can add up even if it appears that cash is outgoing at a minimal rate. We would recommend you section it into clusters, for example, non-negotiables, entertainment, and practical, to see where you can cut down.
Of course, business is profit-related, but it’s not about just making money; it’s about controlling how much you spend on startup expenses and so on so that you can reinvest and grow your small, medium or large businesses to the heights they’re destined for.
Let’s Talk About Types of Costs in Detail
We’ve briefly run through this in the previous section, but breaking them down so that you have a better understanding of what they are and what to look out for is paramount for the growth of your enterprise.
Below, we will discuss the opposing types of costs in detail, as running into a business blindly with no business plan is never a good idea when you’re a new small business owner going into an experienced niche with other successful companies at your will:
Fixed Costs vs Variable Costs
Fixed costs can be a one-time fixed payment of one figure, or they can also be ongoing costs that will always be at the same price no matter what. Whereas variable costs are ongoing costs that will shift depending on several factors, such as inflation, production rate, etc.
A good example of a fixed cost would be the salaries that you expect to pay your employees, or it could be the lease payment every month that you’re paying for the building space you require.
On the flip side, an example of a variable cost would be the products that you buy from your supplier (as business owners will depend on the production rate of the supplier).
Additionally, another variable cost would be the commissions that you pay your staff (if you’re working in sales), as the costs vary depending on their performance in that specific month.
Or, if you’ve used a small business loan to get started, then you will most likely pay varied costs for the credit card each month.
Complementary Costs vs Essential Costs
We all think to ourselves sometimes that something may be needed in a business to improve it, but that isn’t the case in some situations. Not to say that complementary costs aren’t necessary, but you should only make these purchases if you can afford them.
Essential costs are slightly different, as they are costs that will be necessary for the boost of your business’s brand awareness, brand identity, and overall success as a company. Essential costs can also be unexpected costs that will need to be made.
How Much Does it Cost to Start a Business in the UK?
So, how much does it cost to start a business in the UK? Well, everyone’s business start-up costs differ depending on the type of business or niche and the initial funds they have to invest.
In this section, we’re going to give you some knowledge that you need to be aware of when first starting out, what non-negotiable costs you’ll be making, and some beneficial costs that can positively impact your success.
1. Rent (£150 – £1500 pm)
If you’re beginning a brick-and-mortar business, this is one of the key payments that you’ll have to make to sell your products or services to customers or clients who visit your place of work.
It’s essential to include the cost of rent in your initial expenditure sheet. The price will depend on your office space and area of residence.
The cost of rent in the UK roughly ranges from £150 to £1500 pp per month. However, this completely depends on the size of your business.
2. Technology, Advertising, Promotion, and Marketing Costs
Without this expenditure, you will not be able to build an online presence, and that is where most transactions happen nowadays with the rise of e-commerce success.
The cost of advertising depends on:
- The platform you choose to promote your content on
- How long you promote for
- How you advertise your business
For example, if you choose to boost a post on Instagram to promote your business for £10 for 6 days, then this will cost you £60 and your post is estimated to reach around 5,500- 15,000 accounts on Instagram (see image below).
However, it is important to remember that this varies depending on:
- How much you choose to pay over a certain amount of days
- The platform you choose to boost your post on
- The size of your brand
- How far along you are in your brand awareness campaign
If you choose to go down the digital marketing route to increase brand awareness, then this can cost around £1,100 per month. Again, this depends on the marketing agency you choose to promote your business with and the package you choose.
3. Business Insurance Costs, Licencing, and Registration Fees
Although these are payments you don’t want to make, they’re crucial for the beginning of your business in the UK. If you don’t pay them, you’ll shortly be shut down.
The cost of business insurance in the UK can vary depending on the type of coverage, nature and size of the business. However, here is a rough breakdown of the different insurance types:
- Public liability insurance: The cost of this insurance costs between £50 and £500 per year, however, for small businesses, public liability insurance costs around £118.
- Employers Liability insurance: This type of insurance costs between £60 and £200 per employee per year.
- Professional indemnity insurance: The cost of this insurance can start from as low as £85 per year but it can go up, especially for high-risk businesses.
4. Website Development and Design
Unless you’re a professional in the web development industry, you will need a website, whether you’re selling a product or service, as the rise in demand for them online is huge. This is why you shouldn’t miss out on your online sales.
These are all of the costs you can expect to see in your expenditure sheet. However, it is important to remember that these costs can vary depending on your business.
But how much, on average, does website development and design cost in the UK? Again, this can vary based on the complexity of the website and the requirements. For example, a basic website can cost around £100 per year if you design it.
However, if you decide to have a professional design your website, then this can range from £1,000 to £1,500.
These costs depend on the number of pages, whether or not the website is being built from scratch and the need for custom features.
5. Business Coaching (£100 – £500 for 1-1 Sessions or £50 – £250 for Groups)
Business coaching is an excellent way to gain experience from people in your field who have already been there and done what you’re trying to achieve.
Learning from other people’s mistakes and taking their advice will be a huge advantage against other start-up businesses. The cost of business coaching in the UK depends on a wide range of factors, such as the type of coaching it is (whether it is group or 1-1 coaching).
Roughly, 1-1 coaching costs anywhere from £100 to £500 per hour, whereas group coaching costs anywhere from £50 to £250 per person per session.
Business Coaching at MOVE
Here at MOVE, we offer a wide range of services including business coaching. From netwalking for those who enjoy walking while talking to online meetings from the comfort of your own home, we have everything you need in one place.
For more information on the services we offer or to speak to a member of our team, don’t hesitate to contact us today at 07852 970 718. We are more than happy to help.
Mark is a multi-award winner in business networking and relationship building. He is passionate about coaching and mentoring business owners and professionals through 1-1 & group coaching, team performance workshops and group mastermind sessions.