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How much money do I need up front?

By CCIWA Editor 

There is no “average” cost for starting a business, which is what can make finding an answer to this question daunting. 

But getting it right is pivotal. So take note of what your mother used to say: “Not many people plan to fail; but a lot of people fail to plan”. 

Be meticulous in anticipating expenses, include a contingency, then add 10 per cent on top of that. 

It may help to split costs into one-offs and ongoing expenses.  

One-offs will be things such as: 

  • Market research 
  • Preliminary financial and legal advice 
  • Office/shop fitout 
  • Power and phone connections 
  • Business and domain name registrations.  

Ongoing expenses will include: 

  • Leases 
  • Banking fees 
  • Insurance 
  • Salaries 
  • Supplies 
  • Advertising 
  • Marketing 
  • Rent/rates. 

Search online for a start-up costs calculator to help organise this task. 

Check the financial statements of publicly-listed companies in the same industry. Some will make these available on their website, or through ASIC, which also maintains a list of information brokers 

While they will not include start-up costs, these statements may give you an idea of how much other businesses in the same industry spend and what their major expenses are. 

Industry associations are useful too. Join and begin asking around. Look online and ask questions on web forums. Other business owners are surprisingly willing to share their experience and knowledge.  

Beware of hidden costs lurking in loans, insurance, intellectual property and staff recruitment.  

To secure a loan, you may need a professional to prepare business cost and earnings projections. And there will be establishment fees. The cost of domain names and patents can add up.  

The cost of an Australian standard patent (including legal fees) is $5000-$8000, with annual maintenance fees payable from its fifth year.  

It’s been reported Australian lawyers charge upwards of $25,000 to file patents overseas. 

Recruiting, too, can add thousands, particularly if you need to use an agent for specialised staff and pay relocation costs.  

The Federal Government has a range of information and services available and the Small Business Development Corporation has a range of templates and tools to work help work out the costs.

There is no “average” cost for starting a business, which is what can make finding an answer to this question daunting. 

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