Before making even one penny off of your great idea, an entrepreneur must first consider the cost of doing business.
From the cost of rent to business supplies to the coffee machine and Kona that you bought the other day, a person must first be able to financially invest in his or her idea before it begins to make a profit.
So as you’re considering the larger expenses such as renting an office space, for example, don’t ignore the smaller and still consequential expenses that exist for business owners.
This list is a basic sampling of the smaller expenses that, as a new entrepreneur, you might just encounter along the way. I know I did.
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1. Domain Name
One well-known registrar that advertises on television is GoDaddy.com. You can also purchase a domain name from a web-hosting service such as Weebly or Wix. The beauty of the latter is that Weebly and Wix have great templates for building a free website that also gives you the option of purchasing a domain name. I think that it's more beneficial to invest in a domain name than save upfront on the cost because it makes a web page look more professional in my opinion.
The URL of my website included "weebly" until I decided to purchase a domain name, and it just looked tacky. Of course, the choice is yours, but if you think that your URL will look cleaner and more professional with just the name of your business, consider investing in the domain name. All three sites will also allow an entrepreneur to check to make sure the company name is available beforehand to ensure that your company name exists as a domain name.
2. Email Address
What’s a domain name without an email address to go along? A general email account works early on, but any person that takes their work seriously should invest in an email address with an @(name of your company).com or one of the variations (.co, .net, .org, etc.). I created a Gmail account in the first few months because I didn’t see the benefit of making an investment in it until I found clients.
I made the switch once I found people to work with and think that an email address with the name of my business lets people know that I’m serious about what I do, and want something as minor (or major) as an email account to reflect that. Also, consider creating a signature too, which is free.
3. Licensing Fees
You will need a business license in order to conduct business legally, and fees vary from state to state. As soon as I received my first check, I registered my business. That was June of last year. The best place to get more information on the process of applying for a business license is from your local city hall. In addition, if you would like to give your business a name, a fee will also be associated with registering a trade name or business name, also referred to as DBA (“Doing Business As”). Business licenses will need to be renewed each year.
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4. Office Supplies
Whether you run your company from your home or from an actual office, you will probably require basic supplies like a computer, laptop, or tablet, printer, paper, pens, and even software. Computers and their many accoutrements don’t run cheap; and neither do printers. However, if you prepare in advance by anticipating these costs and saving a fixed amount over time, it is easier to make this investment for your business.
5. Educational Materials
If you sell a particular product or service, it is important to stay on top of the developments for the industry to which you belong, and in order to do this, you might have to make an investment in learning materials for your field. Amazon is a great resource for used books, some costing as low as 99 cents. An e-version might also be a less expensive version of a new copy of the physical book as well. On a cost-free note, newsletters and the websites of industry experts are a great place to find useful information without a fee.
6. Health Insurance
Now that you are self-employed, you will be responsible for providing health insurance for yourself, and any employees, too.
7. Appointment Costs
Have you ever bought a client a cup of coffee or even lunch? Or maybe you drove to a one o’clock appointment with someone interested in working with you? Well, $2 for a cup of coffee might be small, but it is still a business expense, along with the amount of gas dollars spent relative to the mileage used to attend the business meeting.
One last thing. A savings plan isn’t necessarily an expense, depending on how you see it, but it is still something that every entrepreneur should develop once he or she feels comfortable, or when a business can adequately support the person behind the company. How tragic would it truly be if, on the day of your 65th birthday, you suddenly realized, “Omg, I forgot about a savings plan”? So to avoid this unfortunate existence, think early about savings options for the self-employed which include the Simple IRA, SEP IRA and individual 401(k), to name a few.
Related Article: 3 Effective Ways to Reduce Operational Costs for Your Small Business
There is a real sense of accomplishment that comes from turning an idea into reality. So for an entrepreneur who has taken the leap from idea to business, he or she is to be applauded.
And as you start this journey (or if you are miles along) where the unknown can sometimes seem like a constant, why not prepare in advance when possible? Anticipating certain business expenses is one way to know what to expect and when, and create a small amount of constancy as you grow your business.