Starting a new business is exciting, but it’s also nerve-wracking — especially the financial part. Depending on what type of business you’re starting, you may benefit from renting temporary office space rather than signing a lease. What other important financial considerations do you have when starting a business?
Regardless of what business you’re in, you’ll likely need an infusion of cash to get it up and running. Quickbooks reported the most recent census showed most entrepreneurs start their businesses with less than $10,000. They aren’t recommending it, just reporting it.
Will you be the only employee? If so, you won’t have labor costs. But it might be a year or longer before you make a profit, and during this time you’ll need enough money to pay your bills. It’s good if you can save up some money ahead of time, but if you can’t, you’ll need to borrow more.
Another major expense can be equipment and supplies. This is a biggie if you are going into sales, as you will need inventory, and this expense can tie up a lot of cash. But even if you’re not, the cost of outfitting office space can be high for a startup.
One way to stretch your dollars is by using temporary office space. This option is great because of its flexibility. You can rent for a year, a month, a week, a day or even an hour. No one wants to dwell on the what-ifs, but if you sign a lease and you’re having trouble paying, you will still owe the landlord a year’s worth of rent whether you occupy the space or not. Not so with temporary office space.
Moreover, your equipment and infrastructure can be provided for you — wifi, phone lines, printers, copy machine, furniture, meeting rooms, everything down to the paper and pencils. It saves you time and money.
Insurance is a huge expense, but it can be more expensive not to have it. The type of business insurance you need depends on the type of company you run, but at the very least, you should carry some liability insurance to protect yourself against lawsuits. You could be sued if someone is injured by your product, if an error on your part cost them money, if they believe someone employed by you sexually harassed them or any one of a million reasons.
You also need health insurance. You can skip it for yourself if you want to pay the federal fine, but what happens if you get sick and can’t run your company? Or if you’re in an accident and the medical bills eat up all your profit? Medical bills is one of the top reasons Americans file for bankruptcy.
Taxes and Compliance
Small Business Trends warns startups not to get tangled in the web of federal regulations. Staying compliant with labor laws, regulations regarding handicapped access, OSHA and paying taxes on time and correctly is a big job. But if it’s not done correctly, you can face fines, which can spell the end of a startup.
The challenges of starting a new business are many, and the better prepared you are, the easier it will be. Plan to have enough cash to meet your expenses for the first six months. And don’t get carried away and invest in equipment you could put off buying until you’re better established.
Save money and make your safety net stronger by using shared office space or temporary office space to get your business up and running. Compare what it costs to run your own office vs. simply letting Metro Offices do the work for you.