10 Costs of Starting A Business No One Ever Tells You About

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Launching a new business is a stressful, exciting, and anxiety-provoking process.

Around 45% of new businesses fail within the first five years, and one of the leading causes of startup failure is running out of cash.

Often, this cash shortage emerges because founders are unprepared for the myriad of startup costs that arise during the first few years of business.

We’re all familiar with typical business expenses like wages, utilities, and rent. But as every first-time business owner can attest to, the costs of starting a business extend far beyond the typical.

In this article, we’ll discuss ten important costs of starting a new business that nobody ever tells you about, so you can be prepared and stay afloat past the five-year mark.

1. Hiring costs

All business owners are aware of the costs of having employees (wages, salaries, purchasing employee equipment, etc.)

But what catches many by surprise is the cost involved in hiring those employees in the first place.

Job boards such as Indeed and LinkedIn allow employers to create free job ads, but your reach is limited. To maximize the number of people your job ad gets in front of, you’ll need to “sponsor” your listing.

The amount spent is set by the user, but you’ll typically need to spend $100-$300 to receive a strong pool of applicants, depending on your industry and the role you’re hiring for.

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In addition, consider the cost of reviewing/processing applications and interviewing applicants. Many startups choose to hire a recruiter to solve this need, which adds an additional layer of expense to your hiring costs.

The legal leg of creating a business is always a cost that no one talks about.

Depending on the country and state where your business is based, you’ll need to pay for:

  • Forming a partnership or limited liability company
  • Filing for a business license
  • Obtaining licenses and permits to operate
  • Drawing up employment agreements and client contracts
  • Executing lease agreements
  • Creating your Terms of Service and Privacy Policy
  • Legal counsel fees

Consider hiring a registered agent to ensure your legal documents are received and handled appropriately. 

3. Website hosting

The design and development of a new website are expected costs for nearly every business.

However, many founders don’t realize there are ongoing costs associated with owning a website, one of which is website hosting.

While many website builders incorporate hosting as part of their packages, these solutions tend to be bare-bones with minimal security provisions and limitations on website usage.

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Professional website hosting is an essential cost for business owners, and it’s relatively affordable, with plans starting at $5 a month.

4. Software expenses

One of the biggest unexpected ongoing costs of running a business is software-related expenses.

Today’s top companies use an average of 37 software tools to market and run their business. 

While your startup might not need that many in the beginning, there are a few software tools you’ll need to invest in, like:

  • CRM (customer relationship management) platform
  • Email marketing
  • Task and project management
  • Finance and accounting
  • Communications (Slack and Zoom)

Some software platforms offer free plans, which can be a great way to get started. However, the limited nature of these plans means that you’ll need to prepare for this to become a regular expense as you expand.

A task management platform, for example, will be necessary for managing projects, especially as you scale your team. This cost will only increase as your team and company grow.

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Marketing software platforms (like email marketing or social media scheduling) will be crucial for establishing yourself in the marketplace and attracting new customers. 

5. Employee benefits

Most business owners expect and understand employee benefits like paid time off and health insurance.

But in today’s employment market, employee expectations extend beyond these.

Salary packages can be made up of a variety of employee benefits, like:

  • Employee assistance program (EAP)
  • Remote work equipment allowances
  • Travel allowances
  • Scholarships or tuition reimbursement
  • Relocation expenses
  • Health and wellness benefits
  • Paid training and developments

One of the greatest opportunities for businesses launching in the modern market is the ability to sell easily to international audiences. 

Of course, this means that you’ll need to ensure your customer service team is prepared to provide support to customers in those countries.

For example, if you’re serving Spanish-speaking countries, you might choose to provide an employee benefits package that allows customer service representatives to develop conversational Spanish skills.

6. Data management

First-time company founders might not realize just how integral data is to business operations.

The quantity of data you’ll amass will likely be larger than expected, and as a business owner, you’re responsible for the safety and security of your customers’ information.

Investing in an enterprise data warehouse solution is an effective way to manage this information securely, but this is an additional cost that likely hasn’t crossed your mind.

Beyond simply storing your data securely, you’ll also need to consider costs associated with management and data analytics. These needs can range from something simple, like a Microsoft Office account, to something as complex as a CMDB.

7. Branding and marketing 

Branding and design are some of the most important pieces needed when starting a business.

Your brand is what differentiates you from the competition, particularly in crowded verticals. It’s what you’ll use to resonate with customers. It’s also what buyers picture when they think about your products or services.

Branding and marketing costs can add up quickly. Logo costs alone can reach thousands, depending on your needs. 

Other branding and marketing costs to consider when launching a new business include:

  • Brand positioning and messaging
  • Website design and development
  • Copywriting
  • Packaging design
  • Branding assets

8. Shrinkage

Shrinkage is the cost associated with lost inventory.

When a company performs a stocktake and the amount of stock on hand is less than what it should be according to existing records, the business has a shrinkage expense.

Theoretically, shrinkage shouldn’t exist. When it occurs, it means that something has gone wrong.

But the reality is that things do go wrong, and shrinkage exists. 

There are several reasons for this, including:

  • Breakages
  • Employee theft
  • Vendor fraud
  • Customer theft
  • Cashier errors
  • Administrative errors

9. Insurance

We’re all familiar with the various kinds of insurance policies we need to take out to protect ourselves individually (vehicle insurance, home insurance, etc.). But there are an additional set of risks that apply to businesses only. They require specialized insurance policies.

General liability insurance, for example, covers businesses for claims caused by:

  • Damage to others’ property
  • Bodily injury
  • Personal injuries such as slander or libel

Businesses can take out insurance policies to protect against lost income. This is called business income insurance.

Other types of business insurance policies that people rarely discuss include:

  • Professional liability insurance
  • Workers’ compensation insurance
  • Commercial property insurance
  • Product liability insurance
  • Cyber liability insurance
  • Commercial vehicle insurance
  • Business identity insurance
  • Key person insurance
  • Data breach insurance
  • Business interruption insurance

All of this adds up very quickly.

10. Bank fees

Banking fees exist for all bank account owners, but they can be particularly high for business accounts.

It’s not just annual account fees you need to consider, either.

While your business is still growing, you’ll likely have to pay for the occasional expense that costs more than you’ve got sitting in your checking account.

To account for this possibility, many businesses apply for an overdraft facility, so they’ll be able to meet their financial obligations even if cash reserves are low. When this happens, the bank charges you interest on the amount borrowed.

If you don’t organize an overdraft and this occurs, your bank may charge you unarranged overdraft fees in addition to the interest charge.

Other bank charges to consider are:

  • Loan interest charges
  • Credit card interest
  • Account and card fees
  • Application fees
  • Out-of-network ATM fees
  • Paper statement charges
  • Wire transfer fees
  • Insufficient funds fees
  • Excessive transactions charges
  • Foreign transaction fees


We all know the old saying, “you’ve gotta spend money to make money.”

Unfortunately, many new business owners don’t realize quite how much money they’ll need to spend to get started. There are a ton of unexpected business costs that no one ever talks about.

Luckily, you’re prepared with a good understanding of the ten most common unexpected business costs, so you can build these expenses into your business plan.

Don’t forget to protect your site against malicious attacks (or you’ll be facing a whole other kind of expense). Check out Whogohost’s SiteLock Website Security solution today.

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