The Most Common Expenses You Startup Might Not Be Prepared For

Anita Ginsburg

May 02, 2014

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There are any number of expenses that startups expect to pay for, such as desks, computers, office space, marketing and much more. These are standard expenses and startups build their initial budgets around them. There are, however, a number of common expenses that you may not have considered when you founded your startup that any business owner should be prepared for.

Bad Contract Fulfillment

Many startups opt to use standard issue contracts, such as those found on DIY legal sites. A badly written contract can leave a startup on the hook for fulfilling a contract that will end up costing the business money, rather than making the business money. An industry-experienced lawyer can develop a contract that accounts for the quirks of your industry.

Fines

States and municipalities often have a rat’s nest of regulations and ordinances that require businesses to file for permits and licenses. This is especially true if you intend for your startup to manufacture a physical product. Failure to secure the right permits and licenses can get your startup a hefty fine.

Work-Related Injury

Work-related injuries create several expenses, some medical and some non-medical. Employees that are injured at work should always hire a personal injury attorney to help them understand their rights and benefits they can receive, suggests the professionals at Dietrich Law. Worker’s compensation insurance protects the startup from medical expenses, but if you need to replace the employee, you’re looking at all of the expenses involved in the candidate search and hiring processes.

Renovations

Whether you’re renting or buying a space to house your startup, it will almost certainly require some type of work. It may be as simple as signage or as complicated an extension, but you will need to pour some level of capital into your business space. Understanding the physical requirements of your startup, such as access to 240-volt outlets for equipment, helps you select a space that needs fewer renovations.

Shipping

Startups often recognize that they will need to pay shipping costs to get products into the hands of customers, but are often unprepared for the reality of the expense. Unlike rent or a loan, which remains stable, shipping costs fluctuate based on the volume you ship and external factors, such as current fuel costs.

Market Research

Although you may bring market expertise to the table, startups often set out to build a product that isn’t like anything else on the market. Understanding whether the product can sell may require the services of a market research firm.

Startups often get blindsided by common expenses they don’t anticipate or prepare to cover. Several organizations help entrepreneurs avoid common pitfalls. The Small Business Administration provides a wealth of resources online, and SCORE helps to connect budding entrepreneurs with mentors.