Do you know what a small business startup will cost? You should.

A small business startup costs you time, money and effort, no matter how you slice it, before you even open your doors. Let's leave time and effort aside for now, since those are variable to each person. But what are your highest startup costs financially? Let's have a look...

Building Costs

Unless your small business startup is a home-based business, your building cost is likely to be the highest of all expenses, not only financially speaking but also in terms of time you need to invest looking for a suitable location to operate from that fits your budget.

You shouldn't underestimate the time you'll need to shop around for the right building and location. Once you've found potential sites, be prepared to find yourself negotiating the final price. Without a doubt, you will want to contact agents and review business property listings to get a ballpark figure for your building costs. I say ballpark because you won't know how much it will actually cost you until you're ready to make a serious offer. However, for the purpose of determining your business startup costs, a very good estimate based on a thorough study of the property market (with the aid of agents) should be adequate.

A good rule of thumb for planning your building and other small business startup costs is to round up - conservative figures help you prepare for the worst-case scenario, and thus, help you look at your new business startup requirements more practically.

Employment Costs

Wages and Salaries

For most businesses, wages and salaries represent one of the highest expenses on their income statement. You simply can't afford to budget too low here, let alone guess how much it will cost to hire the skill and talent you need.

Back in 2005, when helping a client develop and implement a business plan aimed at expanding his business, I suggested contacting employment agencies to help us get an idea how much the kind of people we needed to hire would cost. So we did - we had four agencies working with us to develop job descriptions. The agents were very helpful in determining how much people with a certain type of skill or experience would cost us, and how to best compensate them (e.g., salary, commission, etc.). We even conducted job interviews to see what kind of talent pool was in the market and what their income expectations were. We also contacted employees of other companies - even took some out to lunch - to help us better understand employment costs.

If you want to get a good idea how much of your small business startup costs will be employment-related, I suggest you do the same. It would be well worth your while, as you'll have a very good sense of the employment market and therefore, be able to accurately reflect this cost in your small business startup plan. You can check salary scales by industry and by country at PayScale.com.

Benefits

Benefits are even more difficult to determine, particularly because of the complexities surrounding them. You may want to speak to a financial planner or a qualified benefits consultant to learn more about what the potential costs may be. You will also want to review and discuss the kinds of benefits your employees may expect - based on the type of employees you hire and the norm of your industry.

Equipment and Capital

Every small business startup is going to have different startup capital requirements. There's no real way of discussing here what your startup equipment and capital costs will be, because most of that discussion would depend on the size, location and nature of your business. However, what you can do is study your costs seriously - talk to vendors and suppliers, get real quotations and estimates - and use them to support the startup requirements you will present to potential investors or lenders in your business plan, and as a realistic guide for yourself.

Advertising/Marketing Costs

It's fair to say that any new small business startup needs to create market awareness. Even before opening their doors, new businesses must first determine who to market to and then make the first push. Thus, knowing the costs of both market research and advertising are important to calculate into your startup costs.

Market Research

Market research costs can include surveying your potential target market, conducting focus groups, studying competitors and purchasing industry reports.

This is a cost you definitely don't want to ignore, because, as a small business startup, a thorough identification and analysis of your target market sample can give you insight into:

• Who your customers are
• How they feel towards available products or services in your industry (image, price, quality, availability, customer service/after-sales)
• How much they spend on this type of product or service, and
• Whether they intend to purchase/re-purchase or recommend to others.

While market research is not something we want to get into in detail here, you would be wise to contact agencies to get an idea of research costs. It would also be a good idea to see what kind of market or industry research is already available so you don't have to spend more money repeating the study. Check BizMiner.com to find market reports for your industry specifically for small business startup companies.

Advertising

Part of your market research efforts should also lead you to learn how to approach your target market. Do you reach them by radio, TV, magazines, newspapers? The internet?

The internet has become a very cost-effective, yet highly targeted way to advertise and reach your market. Google's Adwords program is a pay-per-click based advertising medium that allows you to target and reach your niche market through search engine results. Simply put, you bid on keyword search terms relevant to your product or service and pay only when a potential buyer clicks on your ad.

Whether you decide to go with one, two or a variety of media, do your homework and find out how much it will cost you.

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