The Hidden Costs of Launching a Startup

Regardless of the type and the size of a business, creating a detailed business plan is a necessity. Entrepreneurs are usually aware that creating a business involves a lot of initial costs and that it’s sometimes necessary to wait a bit for the return on investment. However, some costs often get overlooked and don’t even get factored into the business plan. Inexperienced businessperson either isn’t aware of these costs at all or they don’t realize how fast the costs can pile up.

Look into these expensive before making a long-term investment and adjust your budget plans accordingly.

Office space

Getting an office from which your business will be run is important on both a practical and symbolic level. Having an actual place of work makes the whole endeavor seem official and real. That’s why a lot of businesses jump into it without considering hidden costs that come with renting an office. Often buying a property turns out to be less expensive in the long run. Also, the offices are usually overpaid because you need to factor in the potential growth in size and manpower and get more space than you actually need. In the end, the cost of utilities that come with the office can also be quite significant.


The regulations for most industries require entrepreneurs to obtain proper licenses for practicing a business. These licenses often come with fees and waiting periods which can hurt business with limited budgets and inflexible schedules. Also, some cities require zoning permits for building offices or retail facilities. Being a member of professional or trade associations is vital for new businesses because it’s the best way to mingle and meet potential customers. Membership in these organizations usually comes with a fee, as well.


Government agencies mandate the use surety bonds for a number of industries. These bonds are put in place to stop unethical business practice and to make sure only qualified professionals participate in businesses that can be dangerous to the public. This is especially important in construction and real estate industries where safety is imperative. For those working on public jobs, contractor bonds are needed as well.

Payment delays

This is usually the most frustrating cost for any business person because it isn’t only hurting your bottom line it’s also making you disillusioned with the industry. Payment delays, however are a fact in every industry and for businesses of all sizes and prominence (but they are obviously harder on smaller and less known companies). Try to establish clear boundaries with your suppliers, customers and other businesses you interact with. That way everyone will know what kind of delay is acceptable. Even with these agreements try to factor in the delay in the monthly budget because there are always factors that are beyond your control.

For startups and small business every cent matters, especially in the first year of doing business. These small expenses can really add up and make an impact on the bottom line if they are not being considered and taken into account. However, it isn’t wise to cut corners on any of them because most of them are vital to running and expanding a business.