How much does it cost to set-up a small business?

How much does it cost to set-up a small business is a question I wish I had researched (googled)before I started my own small business and finding out the hard way. Running a small business that you are passionate about is both fulfilling and a lot of hard work. It is often said that, “90% of new business fail within the first 5 years” and for small businesses is 30% within the first year and there are many reasons why that is. There is another quote that I absolutely love that reads, ‘a business that doesn’t make a profit, is a hobby‘.

For many small businesses, their origin is always from hobby to business and whilst that is great, once we transition over to ‘business mode’ we struggle to let go of the ‘hobby’ aspects of it. As a small business owner, there are so many things I wish I knew before I started my business especially as I have been helping out with my mum’s own small business for years, from setting up the *Modular Exhibition Systems at crafts shows to playing guinea pig for all her new creations. But then again, there is no better teacher than failure.

*Disclosure: This is a collaborative post, all opinions shared are my own.

How much does it cost to set-up a Small Business

For the purpose of this blog post, I will use the blog itself as an example of how much it can cost to set-up a small business especially one that started as a hobby and now is an income generating small business. When it costs to understanding how much does it cost to set-up a small business, its really important to firstly define the market you want to start your small business in and then get to work and researching what you will need to have in place from the get go like – setting up a limited company etc.

From the perspective of setting up a blog as a small business, there are so many articles out there on ‘how to start a blog’ or other catchy titles like, ‘how to set-up a successful blog that can earn you money from day 1’. Whilst it is not impossible, but I find most of these articles to be ‘click-bait-y’ and not something I subscribe to as you want people to truly understand the realities of setting up a blog and how long it can actually take before you start earning any money from it.

Choosing a Niche, Buying a Domain/Host and Setting up Payment Systems

Choosing a niche is something that is important only if you know your target audience and your content will be specifically around that niche, an example is ‘food’. This is an incredibly specific niche but also very broad at the same time because you can focus on recipes (showing how its done) or take a more targeted angle like Vegan foods etc. This in itself doesn’t cost you money but it does cost you time and effort to do your research so you can start off ‘successfully’ by having a clear goal.

Purchasing a domain name and choosing a hosting plan will definitely cost you money and it can be as little as £1 for domain or as expensive as £200 for a hosting plan for the year. This is where research comes in handy because you will need to do your research on which platforms you want to utilise for your content, you can use free platforms like google but remember if one day they stopped ‘blogger’ you could lose all your content.

Setting up your payment systems is so important especially if you are offering services on your blog that people need to pay for. An example could be, you make blogging templates and want people to buy them off from your website instead of hosting them on another platform like Etsy or Shopify. It is therefore very important to do your search on how much this will cost you in the long run. Etsy is free to set-up but to list an item, you have to pay a small percentage and when you sell something, you also have to pay another fee and if the buyer lives in a region where VAT and other regulatory taxes are added on, this will also be charged.

Tools & Equipment, Marketing Budget and Taxes

Starting a blog can be as easy as filing up your computer, connecting to the internet, choosing a platform and start a free blog. But if you don’t have the computer that is your first initial cost, internet costs money too whether at home or a coffee small (use their internet but your got to buy the coffee). When I started blogging, I did it all on my mobile phone but as I started to learn more I realised I needed to invest a little bit more into the types of tools and equipment that I needed. This could be as costly as you make it, you don’t need fancy cameras and computers but sometimes to go to the next level, you will need the best tools and equipment which are often expensive.

One of the things I wish I knew at the beginning of starting my blog as a small business is ‘investing in marketing is not a waste of money’. This does not only apply to blogs but I think to every small business out there, I often hear, ‘your marketing budget should be double’ if you wish to grow your business and make money. When I started blogging, I thought I would just write the blog post (of nonsense) and people would rush to my site to read it, I did not realise I firstly needed to alert them that I exist and I wrote this amazing content and then once they came and found value in my content they would return of their own free will.

TAXESS!!!!!! There is only two things that are certain in this world, death and taxes – I don’t know who said this but I saw it in a movie. In the UK, when you start earning above £12500 (at time of writing) you need to start paying taxes as a sole trader (self-employed). The £12500 is personal allowance everyone in the UK who works is allowed to earn before they start paying tax so if you have a day job that surpasses this and then start earning from your small business, you need to file those ‘self-assessments’ to pay your taxes.

So, how much does it cost to set-up a small business? Well, it can cost as little or as much as you invest in it from time spent to actual money spent. For other peoples, you need to think also about;

• Stock – if you are making things
• Equipments – if you need them to make things
• Premises – if you need a building outside your home
• Legal advice – very important whatever your business
• Insurance – you do need business liabilities insurance to protect yourself
• Taxes – because the taxman is always watching
• Travel costs – if you need to travel for your business

There are so many things to consider and I hope my little example with my own small business (this blog) will help you think of what you need to consider before you set-up your business.