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Getting off the Ground: 8 Startup Costs That Can Kill a Startup

Starting a business is a lesson in patience, budgeting, and stress management. The costs of starting a business can be overwhelming, especially as rent and supply prices continue to rise. Calculating startup costs gives entrepreneurs a good idea of their beginning expenses and budgetary requirements. Understanding that some startup costs can kill the startup prepares entrepreneurs for what could come their way.

Office space

Paying for an office space can be a significant burden for businesses that do not have the cash flow to cover it. To save money, entrepreneurs can run their new businesses from their homes and use virtual mailboxes for their business mail and registration needs. These mailboxes provide a real street address, protecting entrepreneurs’ privacy and professional image without overspending the budget.


Along with office space, the equipment can quickly exhaust startup funds. Established businesses often turn to credit to purchase equipment, but new companies don’t always have the credit history to take this route.

Rather than buying new equipment, startup entrepreneurs can turn to preowned items to save money. Entrepreneurs can also save money by purchasing equipment as they need it rather than pouring money into an entire office suite right away.


Paying employees also exhausts startup budgets. If your startup needs employees, you have to pay them. But, don’t hire more employees than you need. You can save money by doing work yourself, but you also need time to sleep and relax to avoid burnout.

Entrepreneurs should budget for employee costs that are usually about 1.25 to 1.4 times the price of the employee’s wages. You can save money by avoiding overtime and waiting to pay bonuses until your business sees continual cash flow. You can also save money by working with 1099 contractors instead of having employees on a payroll.


Insurance is a necessity that you hopefully never have to use. Businesses usually need a few types of insurance, which can be costly. To save money on insurance, shop around for the best price and get the minimum you’ll need to protect your business, employees, and customers.

Most companies need general liability insurance and worker’s compensation. If you’re working out of your home, you might need to boost your homeowner’s insurance. Entrepreneurs who need commercial property will require insurance for that space, and you might consider errors and omissions insurance.

Web development and marketing

While you’ll need to market your business, paying someone to do it can be costly. Many web developers and marketers expect a minimum hourly wage of $50 or more. Building a website from scratch can cost over $150,000 after six months.

Fortunately, the internet is full of pre-made websites with drag-and-drop features that help startups save money. These are inexpensive and easy to use with intuitive features and helpful tutorials.

You can also save money by using inexpensive social media marketing. If you aren’t confident in your skills, 1099 contractors can be affordable web development and marketing option.

Products and inventory

If you are selling physical goods, you need to spend money to procure them from the supplier. With supply chain issues and shipping costs in mind, you’ll have to do a cost analysis of how to transport products to your business most efficiently and affordably. Expect to spend about 30% of your budget on inventory, especially if that is the main focus of your business.

Legal expenses

Rookie entrepreneurs find that legal expenses can be surprisingly high. Lawyers are expensive, especially the good ones.

Fortunately, entrepreneurs who want to save money on legal expenses for their startups can usually turn to the internet for affordable legal aid. The internet is also full of information about completing business forms for startup forms for sales tax, business registration requirements, and certifications.

Accounting expenses

Along with legal expenses, accounting expenses can be outrageous for new entrepreneurs. New businesses usually don’t need full-time accountants, but they benefit from occasional meetings with a financial expert to keep all of their ducks in a row.

Wrap up

Understanding the costs of starting a new business and preparing for surprises can help entrepreneurs keep their businesses open. Shopping around for the best prices and turning to used equipment can also help enterprises to avoid having to shut their doors too soon.

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