One of the main reasons that startups fail is because they run out of money within their first year. Therefore, as a business owner, one of the most important things you need to oversee is company finances, and although it’s sometimes good to be frugal with your available cash, there are also some things you should not avoid spending money on.
The insurance that you’ll be required to have in place will depend on the type of business you own, but there are a few that usually cover all types of startups:
- Public and product liability insurance: This is essential if your business works with the public. It will protect you if someone claims compensation due to injury or damage that they believe was caused by your business.
- Employer’s liability insurance: No matter the type of business you own, if you have employees, then you are legally obligated to have this insurance in place. It will protect you against any compensation claims that are made by employees for injury or physical damage that was caused at work. You may be fined up to £2,500 per day if you don’t have this in place.
- Professional indemnity insurance: In the event that a customer or client believes you have made a mistake at work (breaching confidentiality, for example) this type of insurance will cover any compensation claims made.
Marketing and branding
As a new company, marketing and branding will be essential for growth. Your business won’t become successful overnight, but sometimes marketing can be a complex challenge, particularly if resources and finances are limited. While it’s true that marketing is non-stop task, investing a decent chunk of cash into it now will certainly serve you well. Set up a SEO-optimised website with up to date content and you’ll generate sales leads that will ultimately retain customers. Those who already have a database of existing or prospective customers can invest in email marketing which will grow your exposure quickly.
To ease some of the strain, you might want to think about hiring professional employees such as an accountant or a lawyer who can deal with the legal aspects of your business that you may not necessarily be clued up in. Although this is a huge investment, these employees will able to offer you advice on copyright protection, partnership agreements, employee contracts and payroll. Companies such as Setup A Company can offer company formation packages that include support to help you with things like VAT, invoices and expenses.
Whether you’ve decided to buy or lease premises for your company, you’ll need to factor this into your monthly outgoings alongside the necessary service charges (water, gas, electric, etc.) If you expect your business to grow physically, you might want to think about choosing somewhere that can accommodate this now to save you time in the future.
The relevant technologies
As technology progresses, there is a growing list of expenses that you need to be aware of before you start to get your business off the ground. You will need to invest money in things such as website hosting, data storage, email accounts and software licenses and, depending on the nature of your business, mobile phone contracts and any third-party services that you might require.