I’m not sure who said it, but the general consensus is that 90% of tech startups and one in three new small businesses fail within the first year.

 

This extremely high rate of failure comes down to money…and a lack of it.

 

I like to keep my posts very hands on and practical so they provide tangible value aspiring entrepreneurs can add to their businesses. This is probably the most honest post you’ll ever see, and it will scare you. That’s ok though. Get used to being scared.

 

Most budding entrepreneurs underestimate the huge costs involved in starting a business from the ground up. They simply don’t crunch the numbers regarding the amount of capital that is needed to turn an idea into reality and then, more importantly, the cashflow needed to keep the idea going and growing.

 

If I had a dollar for every time someone came to me and said they were “just going to make a free website and start selling online!” I’d be very rich- and they would be very poor. Many entrepreneurs see online businesses as a cheaper alternative to traditional bricks and mortar businesses. In some ways they are, but just as if you pay $20 a week for a shack in the back alley of tumbleweed town, if you simply have a website sitting in cyber space with no paid marketing to attract visitors, no one is going to find you.

 

I’ve put together a cheat sheet that outlines all of the costs that entrepreneurs will have to cough up in these early stages.

 

My experience is in online and bricks and mortar fashion retail spaces, so some of these costs may not apply to you, but hopefully the overall size of the list will encourage you to do your own due diligence before it’s too late.

 

As always, these costings’ from my experience only and will obviously differ depending on industry and location.

 

I have rounded up the costs in the interests of conservatism.

 

This is a very high level overview for the sake of simplicity for those who are new to the small business world. Please contact me if you would like more detailed explanations of each category.

 

ACTIVITY: $$$$$$
STARTUP COSTS:

Public Liability insurance

 

Business name registration with ATO

 

Register a PTY LTD company with the ATO

 

 

$500 per year

 

$34 per year

 

$500 + $300 per year renewal

EMPLOYEE COSTS

Wages

 

Weekend and holiday loading

 

Super

 

 

End of year bonuses

 

Worker’s Compensation insurance

 

 

 

 

Depending on amount of employees, starting from 1K per week for 1-2 casual employees

 

 

 

$300 per week

 

 

Depending on amount employed, 2K per quarter +

 

 

1K (if required)

 

$500 per year

 

 

 

 

RENT COSTS:

Shop front- prime CBD location for a small shop

 

Office space

 

 

10K per month +

 

5K per month

INITIAL INVESTMENT IN PRODUCT: $10,000 (bare minimum to fill a small bricks and mortar store or populate an online store satisfactorily)
WEBSITE COSTS:

Website

 

 

Website subscriptions- plugins, live chat, Shopify costs etc

 

Domain name

 

Web host

 

SSL Certificate (Secures your website and checkout)

 

Paypal fees

 

 

Afterpay fees

 

Ebay, Etsy, and other marketplace fees

 

Newsletter provider eg Mailchimp

 

Ongoing website support from developer

 

Payment gateway from your bank in order to sell online

 

 

 

 

Anywhere from 1-5K depending on level of customization and capabilities

 

$200-$500 per month

 

$100 per year

 

$200 per year

 

$300 per year

 

2.6% + 30c per transaction (entry level package)

 

 

6% per transaction

 

From 5% per transaction

 

From $10 per month (up to 500 subscribers)

 

$100 per month as required

 

From $99 setup

$20 monthly fee

1.5% transaction fee

MARKETING AND LEAD GENERATION:

Brand identity: initial outlay for a graphic designer

 

SEO services

 

 

 

Facebook Ads

 

Google Adwords + Google shopping

 

Remarketing Ads

 

Management fees for the above

 

Instagram influencers

 

 

$5000

 

$2000 per month (It is very important to employ a local SEO company. Overseas lead generation often leaves websites vulnerable to hacking and corruption.)

 

 

$1,000 per week for any real results

 

$1,000 per week

 

$1,000 per month

 

$1,000 per month

 

Exchange product for post, however the major influencers with followings over 100K will charge anywhere from $500++ per post

LEGAL AND ACCOUNTING COSTS:

 

Accountant for basic end of quarter BAS and end of year reconciliation

 

Legal services for new leases, employee contracts etc

 

Subscription to accounting software

 

 

 

3K per year

 

 

1K per year average as required for very basic work

 

$30 per month for basic package

TECHNOLOGY:

 

Computers for office

 

Point of Sale system for bricks and mortar store

 

Hardware for Point of Sale system:

-Computer

-Receipt printer

-Label printer

 

Security system

 

Internet and phone connection

 

 

2K

 

10K for license + $100 per month subscription

 

 

1K

$500

$500

 

1K

 

$100 per month per location

POSTAGE:

 

Basic prepaid satchels

 

International shipping

 

Shipping on imported overseas product

 

Duty rates on imports over $1000

 

Sales tax on imports (GST)

 

 

$100 per 10

 

$15 per 500g parcel

 

$1000 per shipment (using an express courier such as DHL)

 

Average 5%

 

10%

 

PRODUCT SHOOTS:

 

Model

 

Photographer

 

Make Up Artist

 

Stylist (if required)

 

Location hire (if required)

 

 

1K for full day

 

1K for full day

 

$500

 

$500

 

$500

BRICKS AND MORTAR SHOP FITOUT

 

In a major shopping centre

 

Smaller boutique not in a shopping centre

 

Bank guarantee for shopping centre/bond for physical store

 

 

100K

 

5-50K (food businesses will require much more capital than a simple clothing or accessories store)

 

4 months rent in advance

OFFICE FITOUT

 

Desks

Chairs

Storage

Photographic equipment

Racks

Kitchenette

Stationary

Whiteboards

Photographic backdrops

 

 

 

 

 

5K ++

BANK FEES (for physical EFTPOS machine)

 

EFTPOS fees

 

Credit card fees

 

 

Terminal rental

 

 

 

.20c per transaction

 

1.5% per transaction (varies between banks)

 

$40 per month

 

(These can be negotiated between banks)

 

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