Startup costs and considerations
There are many points to consider when you start a new business, some will be able to be done for nothing while others will cost money. The activities and costs can be divided int a few groups:
- Essential operating items
- Business building activities
Essential business formation and operating costs
The costs will depend on the type of business you are starting and the industry you are entering. There are costs that every business owner encounters that cannot be ignored, some or all of the following may apply in your case:
- Business formation costs
- Business name registration
- Domain names
- Trade marks/designs/patents
- Property costs
- Rental lease cost (Rent advance/deposit)
- Utility connections & bonds
- Phone connection
- Internet connection
- Vehicle registration
- Building & contents
- Public liability
- Product liability
- Professional indemnity
- Workers compensation
- Business assets
- Business revenue
- Legal costs
- Accountant fees
- Membership fees
- Franchise fees
- Capital costs
- Shop fitout
- Shop fitout
- Computer equipment
- Security system
- Operating costs
- Computer software
- Stock/raw materials
- Stationery & office supplies
- Initial stock and raw materials
- Marketing & advertising
- Travel and accommodation costs
- Market research costs
- Website creation
- Social media marketing
- Print, tv and broadcast media costs
Hiring professional Business Advisers
There are often times when the advice and qualifications your business requires will be beyond the skills of the people employed in your company. Hiring professionals to provide advice can be effective, however, there are many things that you should consider before you make a commitment.
- What you need to do first
- When to get business advice
- Types of business advisers
- Where to look for a business adviser
- What to consider when choosing a business adviser
- How your company will work with the business adviser
1. What you need to do first
It is a good idea to prepare a Business Plan as the first step in identifying your goals and needs. Your Business Plan should contain a SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats) which will help you determine the missing requirements such as skills, professional expertise and cash requirements.
Using this information will assist in defining what type of help you need and the type of adviser that can provide support.
2. When to get business advice
Cost and availability of funds will determine when you seek professional advice to address a particular issue in your business. Before making a commitment to engage an Adviser consider whether:
- The skills required already exist within your team.
- Will the advice you pay for be worth the outlay?
- Is there a legal requirement for getting external advice?
Sources of free business advice
You may be able to obtain the advice you need from sources that you do not have to pay for. Take the time to research potential free advice from:
- Government programmes
- Financial institutions
- Industry associations
- Your personal network
- Social media forums, case studies and free websites
3. Types of business advisers
In the event that you decide an external professional adviser is necessary the next step is to determine which type of Adviser can address your needs. There are different types of advisers are available to help you with your financial, legal and other business needs for instance:
Accountants can give you advice about:
- Starting, buying and growing a business
- Taxation requirements and returns
- Employment obligations
- Record management
- Financial management
You should check that your accountant is registered with the appropriate professional association.
Business bankers should have a thorough understanding of your business needs and can provide advice about:
- Online banking services
- Business credit cards
- Investment strategies.
- Solutions for making and receiving payments
- Finance and loan options
- Industry conditions
Consultants operate in many different fields of expertise and can provide assistance in specific areas of your business e.g.
- Intellectual Property and Patents
- Human resources
- Sales and marketing
A financial adviser can address areas that not all accountants cover including:
- Investment strategy
- Investment placement
- Succession planning
- Risk management
You should check that your financial adviser is registered with and have authorisation from the appropriate professional association.
Qualified brokers understand the insurance market and can negotiate competitive policies on your behalf. They can put together a comprehensive and cost-effective insurance package for your business.
Insurance brokers should be licensed.
Legal advisers can provide support in:
- Creating a business structure
- Shareholder Agreements
- Licensing and compliance
- Contracts and legal documents
- Intellectual property protection
- Dispute resolution.
A business mentor acts as a role model, adviser, critic and consultant. Mentoring can be informal, with friends, family or business contacts providing support and advice when it’s needed. You can also get involved with formal mentoring programs run through government or industry associations.
4. Where to look for a business adviser
The following sources represent places where advisers can be located:
- Business and social networks
- Industry associations.
- Professional associations for:
- Legal advisers
- Financial advisers
- Insurance brokers
- Business bankers
- IP attorneys
- Other online databases
5. What to consider when choosing a business adviser
Before choosing an adviser, you should research their background and qualifications, licences, areas of expertise and fees.
- Check licences and qualifications and ensure they cover the advice you are seeking
- Compare fees and services
- Fees – Different advisers charge different fees for their services. Some will work for a fixed fee, some will work for commission, and others may charge an hourly rate. Try to validate the advisers experience and performance with previous clients, ask for references.
- Services – are they what you need?
- Meet with your business adviser to discuss their fees, experience and how they can help your business. Check whether you will be charged for this meeting.
- Choosing an adviser – ask yourself the following:
- Are they a good fit for your business?
- Is their personality compatible with your team?
- Did you feel comfortable discussing your business with them?
- Did they understand your specific needs and future direction?
- Does their availability suit your needs?
- What are their fees?
- If you have sensitive material that you want kept confidential is the adviser prepared to sign a Non-Disclosure-Agreement?
6. How your company will work with the business adviser
You will be paying for your adviser’s time so make meetings efficient:
- Always prepare for meetings by preparing a clear agenda and desired outcomes.
- Give your advisers accurate information about your business.
- If you have certain information that cannot be disclosed, let your adviser know.
- Keep advisers updated about any changes to your business.
If you have an ongoing relationship with a business adviser, it is worth reviewing your arrangements on a regular basis to determine:
- Are you getting value for money?
- Are milestones being met?
- Are there any unresolved issues with the adviser?
- Does my adviser still suit my business needs?
How Much Does It Cost to Hire a Small Business Consultant?
Exact costs are going to vary depending on what skills you are seeking. Consultants with more experience to charge substantially more than someone who’s just starting out. Some typical costs for consultants are:
|Type of Consulting||Relevant Skills||Average Hourly Rate|
|Marketing||Digital marketing, campaign planning, market research||$25-100|
|Accounting and Bookkeeping||Auditing, accounts payable and receivable, tax preparation||$30-100|
|HR Management||Administering benefits, mediating disputes||$35-175|
|IT Security||Establishing security protocols, penetration testing||$40-140|
All businesses have costs and detailed planning will help you understand and prepare for the expense. It is likely that at some stage in the development of your business you will require expertise from outside sources and turn to consultants to provide the support. Before you engage a consultant make sure you research exactly what you need before you discuss those needs with potential professionals.
There is no substitute for a well-researched Business Plan when you are setting up a business or contracting with professional advisers.