If you’ve decided to set up a company structure, you will have to register this too, which will start at around $597. The setup process could cost more if you’ve consulted an accountant, lawyer or advisor about the structure.
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You also need to prepare for the costs involved in protecting your business and customers if anything goes wrong, Achterstraat says.
“We have recently seen big increases in insurance costs, but most businesses will need some kind of insurance.”
The government’s business information website Business.gov.au outlines the different types of insurance and whether it’s optional or compulsory for your type of business. Founders may also need to get advice from a lawyer or business advisor about the specifics for their industry.
More than 60 per cent of businesses in Australia do not employ any staff, according to the Australian Small Business and Family Enterprise Ombudsman – but if you plan to, your budget will also need to cover wages, superannuation, payroll tax and workers’ compensation insurance.
Banking on space
If a business needs a physical shopfront like a store or office, business owners must also be ready with at least several months’ worth of rent on hand before they begin hunting for properties.
“Pretty much all new leases will require a bond, and that will usually be four-to-six months’ rent,” founder of business law firm Artemide Law, Olivia Hitchens, says.
“In addition to putting up a bond, there are also all the ancillary costs of taking up a lease, including the fit out and levies.”
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Commercial leasing rates will vary depending on your state and area of operation. Hitchens says the best way to do due diligence and work out the market rate is to talk to other tenants in the area before you sign any agreements.
As well as the bond amount, founders should make room in their budgets for other expenses to ensure they are getting the right lease, including having agreements reviewed by an expert to check for hidden costs and make sure any future increases in rent are fair.
“Landlords always want to see you have insurance before handing over the keys, so that is another cost that you can’t avoid,” Hitchens says.
Expecting the unexpected
Australian Small Business and Family Enterprise Ombudsman Bruce Billson says that no matter your operation, you should prepare for costs to blow out.
“Work through a detailed budget on your set-up and early operating cost while you build your revenue – and then double it,” he says.
“Even when I have felt I have done a great job with detailed budgets and set-up plans, it always seems to need around twice the level of investment.”
Founder of EV charging business ChargePost, Matt De Propertis, knows first-hand how costs can pile up during the startup phase.
De Propertis started researching new models of charging electric vehicles a few years ago, after talking to his in-laws about how they wanted an EV but couldn’t justify one because they didn’t have the space to charge it.
He discovered a promising charging technology in the UK that connected to existing kerbside infrastructure, like power poles, and wanted to bring it to Australia.
Initially, De Propertis was able to keep his start-up costs “lean and mean”, spending just a couple of thousand dollars on a website and company registration.
But as he got closer to importing the technology, further costs emerged. These included the need to develop an Australian-approved meter to track how much power the chargers were drawing from electricity poles. “That in itself can cost anywhere from $10,000 to $100,000,” he says.
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While developing his idea, De Propertis was able to reduce the financial risks by keeping his nine-to-five job.
He says consistently reviewing the market opportunity and preparing for the worst-case on costs have been valuable approaches as he’s grown the business.
“There’s no such thing as over-researching the market. I just tried to budget really conservatively, on the worst-case scenario of what everything would cost.”
Next in the series: 10 Things you need to consider before starting a small business
This story was created in partnership with Google. The content is independent of any influence by the commercial partner.