Small Business Start-Up Costs

September 7th, 2022

If you’re thinking of starting a small business, it’s crucial to understand all of your start-up costs so that you can include your finances in your business plan. You simply won’t be able to succeed if you don’t arrange all of the financial resources you need upfront. And with startup business loans being difficult to get from traditional financial institutions, it's essential you put some thought into how your operations will be funded.   

Start-up business costs can be broadly categorised as:

  • establishment costs
  • asset costs, and
  • selling and operating costs.

Let’s look at each of these broad cost categories and how you can help to finance them.

Establishment costs

Establishment costs get your business up and running. They can include things like:

  • Legal and/or accounting fees to set up your business structure (such as a partnership or company structure).
  • Registering your business name.
  • Obtaining any licences or permits that you need to operate.
  • Registering intellectual property (such as trademarks).
  • Getting initial stock to sell from suppliers.

How invoice finance can help

Invoice finance can be a great way to help you get the cash you need to get fully up and running as quickly as possible. It enables you to turn your unpaid invoices into a line of credit that you can convert into cash whenever you need it. This line of credit can grow as your business (and amount of unpaid customer invoices) grows. 

At Earlypay, we have no minimum trading history for you to access invoice financing. The only requirement is that you must have invoices issued to other  businesses.  The more unpaid invoices you issue, the more finance you can secure to quickly grow your business.

Asset costs

Asset costs include items you may need to help you operate your business, such as:

  • premises (and an associated fit-out).
  • Production equipment or machinery.
  • Vehicles.
  • Computer hardware and software.

It can be costly to pay for the assets you need upfront. 

How Equipment Finance can help

Equipment finance can help you buy the equipment you need without an upfront capital investment. It enables you to finance the purchase on flexible terms and conditions that suit your business.

In addition, leasing your business premises may be a better option than buying. If that’s the case, invoice financing might be the right option to help you get the finance you need to make your regular lease payments.

Selling and operating costs

Selling and operating costs are all of the ongoing business costs that you will have, like:

  • Cost of supplies and inventory
  • stock ordering and holding costs
  • staff wages and superannuation payments
  • electricity
  • phone
  • insurance
  • fuel for business vehicles
  • rent (if you’re leasing your business premises)
  • marketing costs
  • product packaging 
  • freight for customer deliveries.

It’s important to manage these costs to ensure they don’t blow out unnecessarily.

How trade finance can help

Trade finance can cover the cost of supplies upfront so you don’t need to carry the cash flow burden. In conjunction with Invoice Finance, Trade Finance is repaid by your line of credit when you raise an invoice for the sale of goods, which is then repaid once your customer pays their invoice — so you have the freedom to buy and sell inventory before you’ve had to pay for the goods. Trade Finance can give you the funds you need to ensure you always have stock to generate revenue to cover operating costs.

If you’re thinking about starting a business, it’s a good idea to write down all the different types of expenses you’ll have, so you can get an idea of what the right price point will be for your products or services. If you’re funding your start-up with your own money, it can help to prioritise some of the expenses — prioritise the essential expenses so you can get off the ground, then once you’ve made some revenue, you can leverage that to grow your business with finance.

Start-up loan for business expenses

Securing a business loan as a new business can be tricky, with business owners sometimes opting to finance early expenses with personal loans (backed by personal assets). Without any trading history, lenders are reluctant to offer your small business a loan. Invoice Finance can be successfully used as a startup business loan if you have invoices raised with other Australian businesses — no trading history required!

If you’ve got a business idea and would like to chat to us about start-up business loans and the suitability of finance, contact Earlypay’s helpful team today on 1300 760 205 or visit our sign-up form.

If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].