Unnecessary Costs of Starting a Business

There are plenty of costs involved when starting a business (hiring people, office rental, energy costs, etc.) with the average start-up cost coming in at around $30,000. On the flip-side, micro-businesses can be kick-started at approximately $3,000 or less.

While many initial costs are necessary, it’s fair to say that many are, in fact, a wasteful investment. And, given that cash flow and investment is all-important at the early startup stage, it makes sense for new businesses to avoid unnecessary expenses and eliminate them entirely.

At first glance some of these costs may appear to be minimal, when you add them all up, you could arrive at a significant amount of money. Which, of course, could be much better invested elsewhere, and provide you with a stronger foundation for success.

Here are four things to consider that can help you reduce any unnecessary costs of starting a business.

Hire flexible people

If you can avoid hiring people for as long as possible, it’s advisable.

Ultimately, as your business grows you’ll have to consider taking on people (employees) to give you a helping hand — just be strategic and selective with the personalities you hire. Your startup should be looking for very specific types of individuals in its early stages.

You need employees with multiple skill sets and the ability to help you out with various tasks in a variety of areas (maybe social media and sales generation).

Naturally as you begin to make more money, you can hire people for specific roles and define the role of existing employees. But in the early stages, flexible people are key.

Image Credit: Pexels

Don’t rent an office straight away

Room rental and rates will cost you money you can’t afford as a startup. It makes no sense to spend all that cash on an office when there are so many other options to consider.

For example, the go-to is working from a home office to save on rent altogether. Or you might visit The Hoxton Mix or a similar co-working space in your area to rent a cheap desk — or just use as a virtual address. Coffee franchises like Starbucks, have become quite popular as daily work areas for “solopreneurs”. I written a few articles for Virgin.com from there.

And there maybe other small businesses in your area who would be willing to rent out a single desk for you to work on your business, for a much lower market rate than you would find anywhere else.

Watch your energy usage

Wherever your business is, make sure that you are keeping on top of your energy bills. Even the simple act of turning off a light when you leave a room can help you save a significant sum of money over your first year.

And if you apply the same efficiency principles to every other electrical device, you will find those savings start to multiply by a huge amount.

Trade in your expensive analog phone line and use smartphone or laptop with services like Skype and Google Hangouts instead. With more people getting used to contacting businesses online, phone lines are an unnecessary initial cost.

It’s also important to factor in your energy usage into your quotation and invoice, particularly if you’re providing a service like web design, application development, graphic design, interior design, writing, editing, and just anything else that requires you using software to create a product. This will help you recoup some of the costs.

Image Credit: Pexels

Paying and being paid

A final point — never forget the importance of cash flow to your business. You always want to be cash flow positive. It will save you from significant debt over your first couple of years.

Try and collect any monies owed as quickly as possible, while holding on to your own payments for as long as possible. It’s imperative that you invoice your clients to get paid on-time.

Set-up lines of credit if necessary, as you will often find that the interest rates involved are much lower than you will find on a credit card.

But, all things considered, it’s always best to bootstrap your company by growing at a steady pace and reinvesting your earnings.

7 Essential Startup Expenses You Should Not Avoid

When you’re starting a new business, money is likely to be tight, which means that, not only will you want to get the most value from what capital you do have available to you, but you’ll also want to concentrate your spending on the most important things your company needs to get started.

With that in mind, here are the essential startup expenses you shouldn’t avoid:

Your Own Domain

Right now, the internet is where it’s at, which means that you should think about purchasing your own domain and hosting package (I recommend Bluehost and SiteGround).

This will not only give you the ability to set up your own website but will also give you a professional email address from which to correspond with clients.

A Website

Of course, it would be pointless buying a domain without actually taking the time to set up your own website.

If you want your online presence to be as professional as possible, hiring experienced web designers to create it, and professional writers to fill it with content is essential and will help your site to get noticed by search engines.

Accountancy Services

If you want to make the most of your capital and ensure that your finances are in good shape, there’s no getting around it, you really do need to employ an accountant, even if it’s only for an hour a month to check that the books are in order.

Professional Liability Insurance

If you want to protect your finances from claims for everything from the inability to provide a service to errors in the product or service you are selling, you need professional liability insurance.

Even if you think you are doing everything right, there is a chance that someone may decide to take action against you, and this could lead to financial ruin if you don’t have the right insurance in place, so look into a policy today.

SSL Certificates

If your business is operating online (and it should be), you really should invest in an SSL Certificate for each and every website you operate.

An SSL certificate can cost as little as $9.99, and it will protect your customers’ data, as well as giving them confidence that they can buy from you without risk.

Database Hosting

If you’re serious about running a successful business, you will need to also run databases.

You need databases to store customer data, databases for staff information and databases to store details of the products you sell, which means that you can’t just use your computer.

You need to either invest in your own database hosting machines (expensive) or use a database hosting company (as little as $100 per month).


If you are running more than a one man operation, or if you are running the kind of business where you will need to meet clients, you should start looking for office space/premises as soon as possible.

The better the areas your business is based in, the more prestige you will have, but don’t blow the budget on an expensive office unless you can really afford it.


What are the startup expenses you believe to be essential to a successful company? Feel free to let me know via Twitter: @phresh_ID