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Set up costs when starting a business

To give your business the best chance of success, it’s important to start with a clear idea of the costs involved, both to start the business, and then to keep it running.

Your business start-up costs will vary depending on whether you’re starting from scratch, taking over an existing business, buying a franchise, or have specific industry related costs. So what do you need to consider?

1. Do your research

Three ways to get a ballpark of how much money you may need to begin your business are:

  1. Put together a business plan and consider making an appointment to speak with a business banker or with an accountant. They will be able to give you an overview of what your set up costs may be for the first 12 months.
  2. Talk to people who are running similar ventures about what costs you might expect. Industry associations will also be a good source of information and online forums are also arenas where people share information.
  3. Consider attending a presentation, or completing a workshop on developing a business plan. These can provide useful hints, tips and tools on how to get started.

2. Costs to factor in

Every business will have different set up requirements and this checklist will help you understand some of the costs you may need to factor in:

  • Registrations and professionals fees
  • Accountant's fees
  • Solicitor's fees
  • Business registration
  • Domain name registration
  • Insurance such as public liability, income protection, vehicles, stock etc.
  • Licences and permits
  • Workers’ compensation
  • Food handling certificates/Serving of alcohol



Potential costs

Setting up shop
  • Office equipment and furniture - desks, chairs, cabinets etc.
  • Shop front equipment - cash registers, refrigerators
  • Stationery and office supplies
  • Utilities such as water, electricity and phone lines
  • Vehicles
  • Other plant and specialist equipment
  • Computers, printers, scanners, modems and IT servicing
  • Software, accounting, security, design, documents
  • Internet and mobile packages
  • Website
  • Logo
  • Letterhead, brochures and business cards
  • Signage
  • Yellow pages
  • Rent/lease agreement
  • Stock
  • Equipment
  • Cleaning
  • Fit out/modifications
  • Insurance
  • Working capital
  • Banking packages, such as overdraft facilities
  • Loans
  • Health and Safety - first aid kits, alarms, extinguishers
  • Uniforms, safety clothing
  • Tools

3. Managing your costs

It’s a good idea to split your costs between ongoing and one off costs. It will also help if you overestimate costs, so there are no major surprises later in the year.

One off costs should include everything necessary to get the business ready for trading on day one.

For managing ongoing costs, you should consider developing a cash flow forecast. This will give you a sense of when money is both flowing in and out of your business over the coming 12 months.

4. Breaking even

Break-even is the point at which you cover all of your costs. What you need to understand is how your costs behave in relation to your sales. Some of your costs will increase as your sales increase. These are your variable costs. The rest of your costs will remain constant over a range of sales. These are your fixed costs.

Once you know your break-even point, you can more accurately plan how many sales you need to achieve in order to start making a profit. This will be of great assistance when you are planning your business set up costs. Remember to be realistic in your planning and allow some space in your calculations for unforeseen expenses.



Next steps: Watch Getting Started in Business webinar

  • Cash managementCash management
  • Statutory obligationsStatutory obligations
  • Business structuresBusiness structures
  • Risk managementRisk management
  • Turning your vision into a planTurning your vision into a plan

This webinar is produced by the Davidson Institute, Westpac's home of free financial education resources, building confidence today for a better financial future.


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Things you should know

General advice: This information is general only and does not constitute any recommendation or advice. It is current at the time of publication, and is subject to change. It has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on the information, consider its appropriateness, having regard to these matters. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this document, including when considering the finance options for your business.