Ever wanted to run your own shop? Whether it be a retail store or a car dealership, you’re going to need some serious funds behind you. Setting up a shop isn’t easy, although can be very rewarding. Those who want to test their business model may be best off setting up an online business first or starting up a market stall. Of course, you can dive straight into owning a physical store and some products may be more ideal for it. Whatever the case, you’ll need to budget. Here is a list of all the major costs so that you can be fully equipped for a successful start-up.
The first expense you need to budget for is rent. Those with a high street location are likely to be very costly, although will guarantee you more customers. Setting up a shop on the outskirts meanwhile could offer you cheaper rental costs, but ultimately make you lose out on business.
Niche businesses may be able to find creative locations to tap into their market. A sweet shop for example my do well located near a school, even if it is out of the way of the town centre. High-end stores meanwhile may pay more to be in a high-end area, even if the rent is higher here.
If you have the funds you may be able to buy a property. You should shop around for specialist commercial mortgages that can meet your individual needs.
One of the biggest hidden costs of running a shop can be utility usage. This won’t have any noticeable effect until you start running your business – other than an initial utilities security deposit upfront.
Electricity usage will be your biggest cost. If you have signage or exterior lighting this will have to be constantly powered (motion sensitive lighting could save costs at night). Having refrigerators will use up a lot of electricity or gas, something to consider if you’re selling food or drink. You then have to power alarms, tills, heating and air con. Always opt for energy-efficient appliances and insulate of possible in order to cut costs on these expenses.
Unless you’re going very minimalist, you’ll most likely need to spend a lot of money converting the property to your needs. This could involve buying furniture such as counters, display stands, mannequins, bookcases and shelving. You’ll probably want to hire handymen to move in and assemble all of this – although if you’re a dab hand at DIY you can do it yourself.
You aren’t required to supply a toilet to customers unless you sell food and drink. However, you may wish to convert this for customer use. If you’re setting up a clothes shop, you may want to set up an area to be used as a changing room.
In most cases, you will be buying or renting a store that was previously a shop. Converting a domestic property to a commercial property will take extra work including fitting in a bigger window and knocking down wall – something which is not recommended unless you’ve got a lot of money behind you.
If you’re moving from an online business or a market stall, you may already have the stock required and have a clearer idea of what sells well and what doesn’t, cutting costs dramatically in this area. If you’re starting a business from scratch when opening a store, your initial inventory will be much higher. Don’t be afraid to go overboard ordering stock as your opening may be a very busy time, and you’ll need that extra inventory to fall back on.
Other than your products, there will be other miscellaneous costs that you’ll need to account for. These could include hangers for clothes, receipt paper and price labels. Shop online to find cheap solutions to these items.
Property insurance isn’t mandatory, but may be recommended it certain areas with high crime rates or areas prone to weather damage. You don’t want to end up with a flooded store or a broken shop window and not have the finances to repair it.
If you’re employing staff, you’ll have to get employer liability insurance to financially cover any times when employees may be ill or sick. There are other insurance schemes that you can also look into such as public indemnity insurance, product liability insurance and business interruption insurance. You may be able to find a business insurance package that contains multiple schemes, or you may not see the point of paying for such voluntary schemes if the risk is not high.
Everything in business and now becoming digitised and this can be a much bigger expense than most people realise. First and foremost, you’ll need a method of handling transactions which could include a till and card reader. You’ll need a computer for handling stock and accounting and other business related tasks behind the scenes. You may also need a printer and a phone.
Other miscellaneous computer devices may apply to different trades. If you’re selling food items that need to be weighed you may need to visit a site such as 1800scales.com where you can buy some digital scales. You may also need a scanner for scanning items, particularly worthwhile if you have a large inventory.
You should also look into ways of securing your shop. A burglar alarm is the most reliable method, but you can also invest in extra security measures such as CCTV. Your computer and till will have to be digitally protected with security software. This will prevent against viruses and hacks (small businesses are more commonly becoming victim to such attacks).
Last but not least, you’ll need special POS software for processing transactions. You should shop around and find the best suited software for your trade. Take advantage of free trials so that you can get to grips with the interface. Accounting software such as QuickBooks is also worthwhile for speeding up your book-keeping.
Signage and branding
Image is very important. Good exterior signage is not cheap but worth shelling out on. You can also buy a board to place outside on the pavement to advertise current deals and promotions.
You may also want to spend some money redecorating the interior of your shop so that it reflects your brand. This will further create a sense of your brand’s identity. If you want to have a uniform, you could even introduce branded t-shirts to further promote your brand.
Now that all the major shop costs are covered, you need to pour money into ensuring people know about you and your store. If you were previously an online business, you may already have a website. If not you should buy a domain name from a site such as godaddy.com and invest in some web designing. You may also want to start a social media page and run a few ads to get people interested in your area.
Physical marketing is just as important for a physical store. Contact your local paper and tell them about your shop and if they’d be willing to run an article. Print off leaflets and business cards that you can post around – ask to put up an advertisement on a council noticeboard or in a newsagents window.
You may want to consider having a coupon or gift card system to lure in more customers, however this could be something you introduce at a later stage. Any marketing stunt you can think of is worthwhile from offering a grand opening event to doing a local radio ad. The more elaborate the more costly, however you’re certain to make more noise in the process and attract more curious customers.
Unless you hope to run a family business or a small boutique store with high-end items, you may want to consider hiring staff to help with busy periods or to prevent you working six hour weeks. Employees can be costly – even the recruitment process may require hiring a recruitment company or advertising on job sites such as Indeed.com.
If you don’t expect to be too busy, consider taking people on on a part-time basis first or hiring a temporary staff during periods such as the lead up to Christmas. For busier trades, you’ll need a larger workforce. Over-hire to begin with – as strict as you make the interview process there’ll always be one employee that drops out in the first week and leaves you with a vacancy.
You can use time before your opening to train up staff. This make the first weeks open less stressful as you won’t have to constantly be teaching your employees the ropes alongside getting to grips with your fledgling shop. Consider offering staff incentives that may increase loyalty. This may include discounts on stock, end-of-year bonuses or some form of commission.
You may want to outsource various staff such as cleaners or an accountant. These could save you time, allowing you to focus energy on other areas.
5 Hidden Costs Of Starting And Running A Business
Starting and running a business isn’t cheap. As the old adage goes, it takes money to make money, and that has never been truer than when it comes to starting a venture. So when creating your budget plan, it is important that you include all the costs that go into running a business.
Knowing what expenses go into running a business can help you not only start the business but ensure you remain in business. Here are five business expenses you need to take into consideration.
1. Employee Benefits and Perks
In addition to wages, there are several employee costs that you must take into account when running your business. Payroll taxes, benefits, and retirement plans are some expenses that, when not accounted for, could cause your business to run you into the red. It’s also important to add smaller expenses such as paid time off, training, conferences, employee turnover costs and office perks as they can add up very quickly.
When you start your business, you might not need a lot of insurance. At the bare minimum, you’ll need liability insurance to protect yourself from liability risks imposed by lawsuits or similar claims. As time goes by, you’ll need more insurance policies to protect your business. This includes worker’s compensation insurance, errors and omissions insurance, property insurance, and business interruption insurance.
The type of policy and amount of insurance coverage you need will depend on several factors, including the type of business, size of business, number of employees, risk factors and revenue. These hidden costs can make it hard to stay on track if you don’t include them in your business plan.
Taxes can be an unpleasant surprise for new business owners, especially if they aren’t generating money. Even if you aren’t making much, paying taxes can hurt your business in the first few years. One type of tax you need to pay is the self-employment tax which is more than 8% of your adjusted gross income. You’ll also pay additional taxes every year to incorporate your business, no matter if you have revenue or not.
There are lots of resources on the internet that can help you estimate the total amount of taxes you’ll need to fulfill your initial expenses. A business startup cost calculator can provide a rough estimate of all the taxes fees you are required to pay when starting and running your business. It can also estimate the total amount of capital you’ll need during your first year in business.
4. Legal Fees
Legal fees are the number one hidden cost for small businesses. This is because small companies are victims of frivolous lawsuits as they are more likely than large organizations to settle rather than litigate. In 2008 alone, the tort liability price tag for small businesses was a staggering $105.4 billion dollars. Settling cases for small businesses costs less than $5,000, but even as low as $1,000 can be significant for a small business.
5. Administrative Costs
These costs will sneak up on you if you don’t include them in your business budget plan. The costs include all basic office equipment like desk, chairs, computers, filing cabinets, printers, utilities, software and office cleaning equipment to name a few.
Planning your business budget is one of the most stressful but important parts of entrepreneurship. Including these five hidden costs in the budget can go a long way toward getting your business up and running.
7 Ways to Cut Costs in a Small Business
Cutting costs in a small business doesn’t have to be complicated or time consuming; the trick is knowing where to look. What may appear small costs on a daily or even monthly basis will add up over time to a significant amount. If you can put yourself in a budgeting mindset, you will be able to identify the must-haves from the nice-to-haves and the essentials from the luxuries.
Of course, cutting costs is not always about not spending money; it can also be about learning to spend your money in smarter ways. Here are 7 ways you can cut business costs and, ultimately, increase profits.
1. Embrace Technology
Technology and business software have moved on considerably in recent years enabling us to streamline efficiency and modernize our operation on a whole new level. Online payment services, accountancy software, online conferencing services, social media platforms…there are a huge number of ways to make your business more efficient and easier to manage.
2. Go Paperless
If you’re still printing and posting your communications and marketing materials, you should try and move as much as possible online. You can send communications and invoices via email and can keep your company’s key data in a more secure virtual Cloud storage system rather than a filing cabinet. You’ll save on the cost of paper, ink, envelopes, and postage, and also make your operation more environmentally friendly through reduced waste.
3. Try (Or Do More) Online Marketing
For most businesses, online marketing is no longer an option; it’s a necessity. From a website optimized for search engines to informative blogs and engaging and entertaining social media marketing, online advertising can yield great results in terms of brand awareness and sales with minimal costs.
4. Stick to a Budget
You can’t make business decisions without a budget; you need to know exactly what is coming into your business account every day and what is coming in, so it’s important to get the right system which enables you to do this. Stick to a strict, cost-reducing budget as much as you can, and you should reap the benefits very soon.
5. Switch Utility Suppliers
A quick and easy way to save money is to switch your business utilities, supplier. There are lots of suppliers out there and changing to a cheaper tariff could save you a significant amount of money each month. It may also be worth considering swapping a traditional phone line for mobile phone contracts or virtual phone systems which use an internet connection rather than a landline.
6. Consider Cheaper Premises
If you can be flexible about where you run your business from, you should consider whether you could be saving money by making a change. You may be able to downsize to smaller premises, sharing office space or even working from home. If you have employees, they may be able to telecommute.
7. Buy Second-hand or Refurbished Equipment
You may be able to reduce business costs by opting for refurbished furniture and equipment rather than brand new items. Many brands offer a good range of their products at discounted prices.
Making Something Out of Nothing: Business Grants Can Make Your Business Grow
Money. Most people need some, others need a lot. For the very few, they can never have too much money. And for these people, business is the way to their pursuit of happiness and success.
But as you all may already know, much like the pursuit of any dream, the road to success is paved with rough terrain and unexpected detours. But all that comes later on in your journey. The old adage remains true here — taking the first step is the very first step.
In business, that first step often translates to whether or not you’re able to generate funds for the business i.e. capital. And that, my friends, is often when many would-be entrepreneurs become disheartened. Because, whether you want it or not, setting up a business is going to require a significant amount of money, something that not everybody has access to.
Unless, of course, you’re able to secure money from a different source.
There are many ways to raise money, but crowd sourcing and business grants seem to be the most popular method as of late. And it’s only rightly so. But between the two, business grants are more secure and they are also more predictable.
With crowdsourced funds, you’re banking a lot on how well people are going to react to your proposal. You’re going to have to convince a lot of people to get the money you need. With business grants, you only need to convince the grantor that your idea has merit — this is not as easy a task as it seems!
What Is a Business Grant?
According to the Balance.com article, “small business grants are small amounts of seed money that further the goals of federal, state, or non-profit organizations.” The main difference between a business grant and a loan is that those who are given small business grants are not required to repay the amount of the business grant.
However, while this may seem like free money to the uninitiated, the difficulty lies in being able to convince grantors to entrust money to you.
This is because grantors are more careful in awarding their grants. For reference, the Federal Government does not award grants to help businesses start or expand. The only businesses that are awarded Government grants are those that yield the most success and in certain industries like medical research, science or environment.
Furthermore, there are many types of grants for specific business types.
Exactly How Important Is A Business Grant?
For a lot of businesses, a grant can mean the difference between success and failure. You may have the most brilliant idea but if you don’t have the resources to make that idea come into fruition it won’t mean much. This rings true even when you’re sure that you’re going to have a very profitable business venture.
A prime example of a business that could quite possibly benefit from a small business grant is Alte, a company that seeks to retrofit existing public transportation fleets with hybrid drivetrains which are more efficient as you put more miles on your vehicle.
Approximately 62 billion dollars is spent on new vehicles every year. Alte’s hybrid power trains could provide a better alternative to fleet owners as these hybrid drive trains would preserve the longevity of their vehicles.
Not only would fleet owners be able to get more use out of their vehicles, but the company would also be earning about 2 billion dollars of revenue every year. The only problem is that the company needs 130 million dollars to start production, a venture capital amount that could be easily solved by a business grant.
So, as you can already tell, business grants have the power to alter the fortunes of a startup. There are many ways to secure a business grant and sometimes you can even get one through a contest, such as this Fedex small business grant contest.
Brexit, Business & The Markets
No matter how you try and look at it, the word ‘uncertainty’ will always come to mind when discussing Brexit. Everyone is uncertain of how things will pan out when Brexit actually happens, and the UK leaves the EU. How will this affect exchange rates? What will it mean for small businesses?
There are more questions than answers as we can only really speculate based on predictions and things that have already happened. As such, we’ve tried to create a summary of everything that you need to know about Brexit, business, and the money markets.
The Current Brexit Timeline
Before we begin, it’s a good idea to see where we are in the Brexit timeline. Research from DailyFX – In June 2016 the UK public voted to leave the EU. This was followed by the triggering of Article 50 in March 2017 to show the EU that the UK will leave in 2 years. Fast forward to March 2019, and we’re currently in the midst of a deal being drawn up that parliament will vote for or against. If they agree, we leave the EU and go into a transition period that takes the UK up to December 2020 when the government and EU agree on the future relationship. If no deal is approved, then the UK just leaves the EU without a deal.
Why is all of this important? Because it’s having a crazy effect on the money markets – particularly the exchange rates. Not only that, but business owners have no clue what this will mean for them.
Uncertainty From The Beginning
We can only speculate about how businesses will function after Brexit, but there’s no denying that confidence is at an all-time low. Everyone is predicting a period of financial uncertainty because some big companies may cease investment in UK goods, which is bad for all businesses in the UK. Then, there are the EU Trade Regulations that could start charging the UK when trading with countries from the EU. As such, it becomes more expensive to purchase raw materials for small businesses, which could put a lot of people in a dangerous situation.
Everyone was uncertain from the moment Brexit was announced, and things appear to be even worse right now.
Problems In The Money Markets
If you look at the currency exchange markets, there are recent indications of problems for GBP. Specifically, the GBP/JPY pairing is trading in the red in Asia. Experts say this is thanks to the current negotiations about the Brexit deal. Nobody really has a clue what’s going to happen, which creates further uncertainty in the money markets. There’s been a lack of progress, which is why GBP is falling in value.
So, the easiest way to summarise things is that Brexit is currently hurting the markets. A lack of control over the situation from the UK government leads to growing fears from markets all over the world. This creates a lack of faith, hence the decline of GBP. As for business confidence, things aren’t much better. We can’t say for sure what will happen when the UK leaves the EU, but we can say that nobody is very optimistic.
How to Set Up a Payroll: A Simple Guide for Startups
When you start a new business, there will always be a great deal to think about. But there is one thing you cannot overlook.
If you can’t get a grip on your payroll process, you could lose the talent you worked hard to acquire. Your employees work for you in exchange for compensation for their time and talents.
When you start out, you’re not going to be a payroll expert unless you’ve worked intimately with a payroll in the past.
Do you need to learn how to set up a payroll? Continue reading to find out more about how to do so.
Tips for How to Set Up a Payroll
Setting up payroll may not be as easy as it sounds. Many new entrepreneurs find themselves with a fundamental misunderstanding of the payroll process. The steps you need to take are as follows:
Employee Information and W-4s
In order to complete the necessary tax information, you need to have your employees’ information. This includes each employee’s social security number (SSN) or tax identification number (TIN).
Each employee should fill out a W-4. This will determine how much money you should withhold from each paycheck. You will withhold less money for those workers who have more allowances or dependents.
Employer Identification Number (EIN)
Every employer must have an EIN. You may need to apply for one with the IRS. This will serve as a sort of SSN for your business.
Know Your Dates
There are a few dates you need to keep in mind. You need to know when you pay your employees, when you pay your taxes, and when you file.
Mark your calendar and never forget these important dates.
Calculate and Withhold Taxes
Make sure to keep track of how much in taxes you should withhold from your employees’ paychecks.
You can use an IRS withholding calculator to determine how much federal and state tax you should withhold.
You may need to submit monthly tax deposits on the federal, state, and local levels.
Prepare and File All Tax Forms
Some startups may choose to issue paper checks, even though the direct deposit is readily available. This is because paper checks may be cheaper for the time being.
Each paycheck should come with a paystub, which outlines employee wages, time, and withholdings. You may find a paystub generator to be a useful tool for this process.
Payroll Processing Doesn’t Need to Be Hard
At first, you may think payroll is an intimidating and overwhelming process. You’ll find there’s more to it than you originally thought.
There is more to learn about handling your business finances. From how to set up a payroll to managing your cash flow, you must know it all!
It’s time to sit down and do some necessary homework. To learn more about managing your finances, visit our section on accounting and finance.
5 Things That Increase Your Risk of Getting Audited by the IRS
Running a business can be stressful enough, and the last thing that you want is to be audited by the IRS. Even when a business has nothing to hide, it can be intimidating to handle an IRS audit.
More often than not, the idea of getting audited is more serious than the event itself. Most audits are done through the mail and, as long as you are honest, may work out in your favor. Keep in mind that it is important to seek professional help if you are struggling with your taxes.
That being said, below are five things that may put you on the IRS’s radar.
Making More Money
According to IRS statistics from 2016, if you show a significant increase in income from one year to the next, your chances of getting audited can increase from 0.65% to anywhere from 1.7% to 5.9% depending on your reported income. In addition to the increase in potential auditing by moving into a new tax bracket, sudden increases in income – especially for self-employed individuals – will be red flagged by the IRS, even when they are legitimate.
Filing Income Tax When It’s Unnecessary
If you file an income tax when you had no taxable income for the year, especially if you previously had, you are at higher risk of getting audited. While you are required to file a return regardless of how much income you made, the absence of income will raise eyebrows in the IRS.
Not Reporting All Taxable Income
All taxable income is required to be reported to the IRS, especially if it is traceable. The IRS recieves copies of all tax forms that you receive. Anything paid to you by other entities such as salary payments (W-2s or 1099s), dividend income, and interest paid is tracked by the IRS. Tax professionals can review your files before you submit them to ensure that you are not missing any pertinent information.
Improper Use of Reported Income
If you report income that was used for purposes other than stated, you increase your chances of getting contacted by the IRS. This typically happens when people invest money into an idea.
By not paying or purposely underpaying taxes, you are at perhaps the highest risk of getting audited. There are many clues the IRS will look for to find individuals who are participating in tax evasion. Some of the red flags include claiming 100% use of assets (such as a vehicle) for business, deducting business travel and meals, taking higher-than-average deductions compared to other businesses in your field, or anything else that could be seen as stretching the truth. This is especially true with individuals who are self-employed.
For some individuals, there is nothing more terrifying than getting contacted by the IRS. In reality, these routine audits should be nothing more than a formality that you have to engage in as a working professional. Audits are nothing to be concerned about for an honest taxpayer.
- Social Media9 months ago
Top 5 Advantages and Disadvantages of Social Media Marketing
- Management7 years ago
The man who destroyed his multimillion dollar company in 10 seconds
- Management11 months ago
7 Essential Tips For Opening a Mechanic Shop
- Innovation2 years ago
5 Ways How Globalization Impacts Small Businesses
- Management1 year ago
The Five Common Materials Used to Manufacture Reusable Grocery Bags
- Management3 years ago
What Are the Penalties for Hiring Illegal Workers?
- Accounting & Finance8 years ago
Advantages and Disadvantages of Taking Small Business Loans from Banks
- Management6 years ago
Workforce Planning – Balancing Demand and Supply
- Management8 months ago
The Importance of Presentation Skills in Business
- Management1 year ago
Pros and Cons of Offshoring
- Management6 years ago
If you fail to plan, you plan to fail
- Sales6 years ago
7 Steps To A Positive Attitude & Better Sales