The Real Operating Costs of a Business Startup

operating costs

Sick of sweating it out only to see someone else profit from your efforts? Looking to be your own boss so you can grow your own business and do things your way? By all means, go right ahead.Just make sure you know about the hidden and unexpected costs of being a business owner before you take the leap. If you plan ahead, there's every reason for it to be a success. If you're ready to learn the real operating costs of a business startup, read on!

Owning Your Own Business

The idea of getting up at sunrise every day, putting on a uniform, and sweating it out all day for someone else's business profit ain't so great. Especially if it's the sort of boss that doesn't know how to treat their employees well, and offer some appreciation or encouragement.No wonder you fantasize about being your own boss.Imagine arriving at a time that suited you. Imagine being able to plan the business strategy, focussing on the big opportunities as you see them. Imagine selecting your own dream team of employees so reliable they're bankable.

When It Isn't so Great

The only thing is, there is a catch. When you work for someone else, you get a guaranteed salary every other week. You can plan your spending, splurges, vacations and the rest based on that number since it doesn't change.When you own your own business, you're responsible for all those unexpected costs. Like the higher than anticipated energy costs cause your workers used air con in the unseasonable heat for the past two weeks. Or the worker's comp payout that you still doubt even happened at work.

Making It Work

All of these unexpected costs mean it can get harder to plan your life, as it's harder to bank on your earnings. But here's the thing, you shouldn't let it stop you from trying a business startup. There are lower-risk opportunities in things like franchising, for example.The real trick is knowing the risks and the real operating costs and planning for them. Then you can still have the freedom of being your own boss while getting the profits, and taking vacations and getting out of doubt to boot!

Operating Costs to Be Aware Of

Did you know three in four startups fail, despite having venture capital backing? All the more reason why you need to plan your budget wisely. While you're in the planning phase, there are some key costs you should expect.

Permits and Licences

Want to Trademark your name or product? It comes at a cost. As does general business registration with municipal, state and federal authorities.Next, are you offering a health, alcohol or food product? Something to do with safety? These will all require a permit, and proof you won't cause harm.This is especially true if you're considering importing raw goods. Permits can mean a lot of bureaucratic red-tape, and the cost of legal experts who know how to get your application filed and processed as fast as possible.Start with some online research into what permits you might need for your business startup.


The idea goes that you shouldn't have a marketing budget since whatever you spend is an investment in increased sales. That's all well and good for big business, but if you're just starting out, marketing is definitely a cost you'll need to account for in your budget. In the beginning, it's likely to be a cost you're slow to recoup in sales.The good news is that the digital world offers a lot of marketing help at a relatively small cost. You can create your own designs using the free version of Canva, and share news of your business at no cost by posting on Social Media.If you do decide to actively advertise, you can target a particular audience with great precision relatively cheaply using your social media platform of choice.


Remember that workers comp payout we mentioned? Having the right insurance takes away the stress of similar situations since it's now your insurance company sending in their expert team of lawyers to fight on behalf of your business.You'll need to pay now for unexpected disasters in the future, and that's why insurance comes into your budgeting early on. Budget for workers' compensation insurance, commercial property insurance, and commercial auto insurance, if applicable.Do your research to compare rates online, and consider partnering with a commercial licenses agent to assist you n the process. They may be able to bundle the different insurance coverage you need and offer a better rate in the process.

Location and Equipment

If your business needs a physical space to work in, you'll need to factor in rent costs. As well as the computer hardware and other equipment you need to operate.There are a bunch of reasons why coworking spaces are growing in popularity, so they're worth considering when you weigh up your options.


Need electricity? Water? Internet?We thought you might. Get some online costings, and add them to the budget. It's a good idea to talk to people operating similar businesses and ask what essential utilities and other services they pay for.

Hot Tip: Ask Around

You'd assume that competing businesses wouldn't want to tell you their secrets.In reality, most other SMEs are only too happy to provide support to a fellow business owner. Look for local business support and networking groups early on.You'll find helpful connections and just-in-time advice on how to be a success.

From Operating Costs to Profits - Let's Go!

There you have it: the real operating costs of a business startup. Don't let it frighten you off taking the leap.Work to make a list of all of the expected and a few possible unexpected costs, and then plan them into your financials. The real takeaway here is not to shelve the startup idea, but to go into it with your eyes open.If your interest area is franchises, consider OpenWorks. We're a full-service commercial cleaning franchise that offers cleaning, janitorial, and maintenance services, as well as integrated facility services through reputable local partners and franchisees.At Openworks, we have 23 corporate offices across the United States and over 600 franchise locations. For more information on our franchising opportunities, check out more at our blog today!

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