The Costs of Going Alone You May Fail to Consider

Article from Gemma Humphries 

Setting up a new business and deciding to go alone can be many things: exciting, daunting and, above all, expensive. For many people, deciding to go alone is the very best decision they could make, but if you fail to budget properly, it could also end up being a very expensive mistake. Starting out on your own takes bravery, brains, and a huge injection of cash, meaning that many people with young or growing families simply can’t afford to take the plunge. This means that there are a huge number of people choosing to go it alone once their nests are empty, and they have shed many of the financial responsibilities and obligations of family life. Thinking of starting your own business and becoming your own boss? Here are some of the expenses that new business owners often forget to include when calculating the cost of establishing their own business, and how you can avoid making these common mistakes:

Networking isn’t Cheap

It has long been acknowledged that the most successful freelancers and start-up businesses are those that take the time to ensure they have a strong network around them: that means viewing everyone as a potential client, and taking the time to go out and meet as many local businesses, clients and competitors as possible. However what people often don’t tell you is that networking can be expensive: the cost of attending industry-specific conferences, in particular, can run into hundreds of dollars when you consider the ticket cost, travel, hotel accommodation and other expenses. Include a monthly budget for networking in your business plan, so that you view it as a legitimate business cost.

Have the Right Protection

Many new business owners simply don’t think about insuring their business: and many that are aware they need business insurance choose not to purchase it. When money is tight, one of the first things people think about canceling is their insurance. It’s true that, in the short term, the money saved on insurance premiums could be reinvested back into your business, but if you can’t afford your insurance costs then you definitely can’t afford to be uninsured! Business insurance, public liability insurance, payment protection insurance…these all serve to protect you should the worst happen to your business. If someone trips and falls on your business premises and decides to sue you (regardless of whether they are an employee, customer, or client) not having adequate insurance protection could well mean that the costs of a lawsuit. Any associated financial settlement could lead you to bankruptcy, and you may well have to close an otherwise successful business. In both the US and the UK, it is a legal requirement that businesses with employees hold certain types of business insurance. For many freelancers or small content writing companies, the cost of business insurance will be relatively small, but it is important that you ensure you have the right kind of coverage.

Invest in Your Website

With certain industries, particularly if you are a freelance writer or content creator, the web is one of the biggest tools available to you to market yourself. Your website is the perfect place to showcase pieces you have written, who you are and what you can do. However, unless you also side line as a web developer and graphic designer, a good website (no matter how small) isn’t something that comes for free. Set some budget aside to invest in your website and ensure it represents you in the slick and professional way you want it to: and then set aside some additional budget to advertise and promote it! It's not enough to simply have a great website: you need people to want to view it too!

Make Sure You Get Paid

Finally, don’t forget to pay yourself! Your business may look artificially profitable if you are not ensuring you receive a proper salary from your business (by which we mean enough cash to pay your bills and buy groceries). Many people buy into the ideology of the starving entrepreneur, but in reality, it’s important to acknowledge that your most expensive financial outgoing and investment will actually be you! By paying yourself properly from the start, you will have a clearer picture of your businesses true financial situation, and whether it is actually viable or not. You should also budget to ensure you have some basic benefits, such as medical insurance and the occasional sick day or vacation day, to ensure you maintain a good work-life balance. It is only when you are covering all of these expenses and still running a business that turns a small profit that you can consider your business to be a success.

Thank you for visiting my blog.  I hope you enjoyed my point of view and would like to receive regular posts directly to your email inbox. Toward this end, put your contact information on my mailing list.  

Your feedback helps me continue to publish articles that you want to read. Your input is important to me so; please leave a comment.

Jim Weber, President

New Century Dynamics Executive Search

JimWeber@NewCenturyDynamics.com

Author of: Fighting Alligators: Job Search Strategy For The New Normal

Current Assignments

1. COO- Atlanta-based Casual Dining Restaurant Company - New

2. Director of Business Dev, Atlanta-based B2B Professional Services Company: Complete
3. Payroll-Benefits Manager, Atlanta-based Retail Company:  Complete
4. Senior Accounting Manager – Atlanta-based Manufacturer. Offer Accepted
5. Controller - Atlanta-based Restaurant Company:  New