If you’re looking to start a business in 2024, then it's important you have your finances in order ahead of time. This will give you the best chances of success moving forward while also helping to keep your stress levels to a minimum. However, if you are new to the business world, it can be hard to know what you need to budget for — which is where this guide comes in handy.
By Team Savant
Image: Sincerely Media
Legal Costs
There are many legalities associated with running a business. For example, you need to register your business with the appropriate governing bodies for taxation purposes. On top of this, you’ll need to pay for things such as business insurance and trademark licensing.
Marketing
While there are some tasks that you can afford to cut corners with, others, such as marketing should be considered a priority, especially during the early stages of running a business. After all, if you do not market your business correctly, you’ll struggle to build a customer base.
If you are unsure exactly how much money to spend on marketing, it’s generally advised that “new businesses allocate between 12-20% of their gross revenue on marketing.” However, as your business becomes more established, you can reduce this expense quite considerably, as you can begin to rely on your reputation.
In today’s digital landscape, leveraging data-driven tools like social media pixels is crucial for effective marketing. These small pieces of code allow you to track visitor behavior on your website, providing valuable insights into your audience's preferences and habits. By implementing social media pixels on platforms like Facebook or Instagram, you can create targeted ads that resonate with your ideal customers. This not only maximizes the return on your marketing budget but also helps establish a strong online presence.
Equipment
In order to ensure your business runs smoothly, you need to invest in the right equipment. However, it's vital that you source these products carefully so that you’re protecting your budget as much as possible.
For example, if you’re running a food service business and are in the market for a commercial fridge for your kitchen, keep an eye out for brands that offer significant discounts on these products or sell them second-hand.
Overhead Costs
When budgeting for your business, you should also ensure that you have an understanding of your overhead costs. This refers to recurring payments that support your business but aren’t directly related to your products or services. For example, this could include:
Rent/Mortgage payments
Utility bills
Employee salaries
Employee benefits packages
Wifi
Office supplies
Employee Well-Being
While you may have already set some money aside to cover employee salaries and benefits, you also need to ensure that you invest in your employees and their well-being. After all, this will improve your employee retention rates, meaning that you’ll spend less money on recruiting in the long run.
Market Research
Before launching your business, you should also ensure that you carry out significant market research. For example, you should host focus groups that allow you to meet face-to-face with your target audience. While this does come at an additional cost at a time when you’re yet to be earning any money, it does help you put your best foot forward.
After all, it means that you can ensure there’s a clear demand for your products or services before bringing them to market. If they express disinterest in what you have to offer, it is a sign that you need to go back to the drawing board - but at least you’re finding this out now and not later.