Have I missed out any costs

[Mum&Boss]

I am trying to work out my standard monthly costs for my business start up and I know I have read somewhere that there are common costs that people forget to include. Could someone look at my breakdown and tell me if there is something else I may want to include or remove from my monthly costs? I am starting a toiletries & cosmetic business.

Product Liability/Public Liability Insurance

Merchant Fees
Bank charges
Accountant
Accounting software
Web Hosting Fees
London Chamber of Commerce
Mobile Phone (PAYG)
Social Media Management subscription
Social Media Marketing (I.e Ad Words)
Web Maintenance
VoIP line
Relevant industry subscriptions
Order fulfilment costs

(I am starting from home so rent, utilities are currently covered from my personal income from employed work)

Thank you

 

[fisicx]

Social Media Marketing is not AdWords and there is no need to pay for Social Media Management.

But you do need a general Marketing budget - this includes all advertising, promo material, SEO, posters, magazine adverts, banners and any shows you want to attend.

You don't need to pay for Web Maintenance but you will need to pay for a website to be built - this could be thousands - it all depends on what you are selling and to whom.

And you may need insurance.

 

[boring-friday]

I'd remove most of that:
product liability insurance
bank charges
accountant
accountant software
london chamber of commerce
social media management
social media marketing
web maintenance
industry subscription

 

[Mum&Boss]

Sorry I wasn't clear re: the social media management subscription. I was thinking of something like edgar, hootsuite etc

I currently have someone who is going to build my site but I added maintenance costs for things that may go wrong and need fixing (which I will not be able to do myself. I thought it may be a good idea to set a monthly budget for this, so even if the budget is not used, it is there and not an unexpected expense? Am I overthinking this?

Thank you so much for the current feedback

 

[Alan]

You probably are over thinking it for a start from home business.

All of the costs you mention are relatively trivial except marketing / advertising which is always underestimated.

 

[fisicx]

Am I overthinking this?

Yes

If you have something to post then just do it yourself or pay someone like @HazelC to do it for you. But the toiletries & cosmetic marketplace is already saturated so you may find Facebook adverts have a better ROI.

Which is why you need a decent marketing budget as you will be testing lots of different methods for the first 6 months or so. And the next 6 months will be building up traffic and the year after that covering costs. You should be making a reasonable profit by year 4.

 

[Mum&Boss]

Thanks for that! Sometimes I need to run through things with others to ensure I am on the right path (or not)

 

[fisicx]

So how much have you budgeted for marketing? Less than £100/month won't scratch the surface.

 

[Mum&Boss]

Around £500 a month I can comfortably afford, any more than that will be a struggle. Do I need to rethink this?

 

[fisicx]

That's a decent amount. Get in touch with @directmarketingadvice he will be able to help with Adwords and stop you wasting money.

And make sure the website developer knows your marketing strategy as this dictate the type of site you need. Different marketing methods require different website layouts and structures.

 

[Mum&Boss]

Thank you for the link! Highly appreciated

 

[Mum&Boss]

I have just contacted him, I shall see what he says! Other forums have made me feel really dumb for asking questions but this forum has really helped me!

 

[MOIC]

You should include at least the following:

Website
Website Updates (If you do not have any experience in this field)
Hosting
Marketing (As much as you can afford)
Internet/Landline/Mobile
Bank/Paypal Fees
Fulfillment Costs (if that's your sole method of selling)
Postage & Packaging (If sending out yourself)
Online Platform Fees (If you are planning on selling on eBay & Amazon)
Accountant(Start up - Budget for £300 for first year)
VAT (Should/When your business exceeds the threshold)

If you are planning to import your products to sell:
Shipping Costs
Import Duty
VAT

Ensure you allow sufficient budget for your product costs and have enough capital behind you not to rely on your sales forecasts coming to fruition.

When calculating your first year projection, it's probably a good idea to increase your expenses by 25% and decrease your anticipated sales figures by 50%.

Good luck with your venture.

 

[Mum&Boss]

Thank you for that @MY OFFICE IN CHINA

Currently I have saved what I think should be enough for 12 months worth of expenses should I not make any sales at all. My dad passed away and left a small bit of change, so that is what I have set aside for marketing and 12 months worth of costs. I will only be using my website and no amazon or eBay. I signed up with Braintree who offer a fee free merchant service for the first £30,000 and there are no fees on my bank account for the first 12 months so I am saving money there.

With the fulfilment costs, they include the postage (as in they charge me for the storage, picking, packing and postage all together), should I still count these as two separate expenses?

 

[MOIC]

With the fulfilment costs, they include the postage (as in they charge me for the storage, picking, packing and postage all together), should I still count these as two separate expenses?

No.

Although it's important to look at ALL their costs & fees.

Depending on your product category, I would advise looking at eBay (and later Amazon) to give your business a "kick start".

Good luck

 

[Mum&Boss]

Thank you

 

[fisicx]

Agree with using Amazon and eBay to jumpstart the business. Establishing a website in such a crowded market can take a long time (often many years) so you need a way to start shifting product as soon as possible.

Are you selling established brands or is it a new range?

 

[Mum&Boss]

Morning!

It will be my range and it does currently have a niche. Not to say that this will make sales boost but it will be a brand with a small difference. I can't say too much as I have been advised not to at this stage. It's not a home spun product as I will be using a chemist but the formulations are inspired by the formulations I have been making at home for my sons and I. The skin care range is targeting babies and young children.

I think I will look at Amazon. I used to run a retail store selling a lot of US brands and Amazon was brilliant for reaching a new market. I made my annual sales in December during the Christmas period in 2013.

 

[fisicx]

In that case add testing and certification to your costs. There was a thread here a while back about this and it wasn't cheap and it took a long time.

And because it is niche and unknown the website structure needs to be slightly different to the norm. If your web guy is building a standard ecommerce site it won't work. It needs to focus on the target customer not the products.

 

[Mum&Boss]

I have already paid the testing and certification costs and you are right, they are not cheap and testing will not seem to finish until April!

My brand management company are designing the website and I am using the Magento platform because my offering will expand with due time and I do not want to change platforms. I also have experience with Magento so I thought it would be easier using something I know. Looking at your historic posts, you seem to know your fair share about web design, could I inbox you regarding my web design as the branding company will be able to design but they would not be able to code it. I did have someone in mind to code it but I do not know if they will look at the bigger picture the way you seem to.

 

[MOIC]

Different countries (specifically USA) will have different testing certificates and requirements.

You should consider this before putting your products on Amazon for sale.

 

[fisicx]

Do not let the branding company anywhere near the web design. It's totally the wrong way to do things. The start point should be the structure of the site then the content and images, then play with the navigation and checkout and once you have all that organised you can begin to play with layouts. Begin with how it works on a phone then move to tablets and finally desktops.

I'm not a Magento developer so can't help with the coding but I can help with all the above. Tell the branding company to stop designing the website.

How many products are there in the range? It may be that Magento is a bit of an overkill if the number is under 100(ish).

 

[Mum&Boss]

Different countries (specifically USA) will have different testing certificates and requirements.

You should consider this before putting your products on Amazon for sale.

Yes, these have already been addressed i.e. USDA certification and labelling requirements and any other requirements which are state specific. We are more stringent here in the UK than they are in the US which made my work easier as I had already started the process here.

Do not let the branding company anywhere near the web design. It's totally the wrong way to do things. The start point should be the structure of the site then the content and images, then play with the navigation and checkout and once you have all that organised you can begin to play with layouts. Begin with how it works on a phone then move to tablets and finally desktops.

I'm not a Magento developer so can't help with the coding but I can help with all the above. Tell the branding company to stop designing the website.

Luckily they had not started, it was the agreed next stage as I wanted to do one thing at a time. It's too much doing too many things at once. I am glad you mentioned functionality as this is what I have been doing whilst they work on the branding. I have been looking at how the site would work, i.e. How responsive it is, how to minimise information, the checkout process etc etc. I think I will tell them to hold off on the design until I have all the above mentioned things figured out and in place!

Thank you both!

 

[fisicx]

One other thing.

Branding is far less important than your think. All you really need is the company name. The colours, fonts and imagery can all come later. I'd put money on you changing your branding after a few months once you have some sales data.

So maybe employing a branding company right now is a bit premature.

Egg sucking time: brand =/= branding

 

[Mum&Boss]

It's too late now as they have already started working, I realised this after I had asked them to start working and paid a 50% deposit. But I guess it's one of those lessons. Luckily I didn't spend as much as I could have to be honest. They are only doing my logo, copyright for my product descriptions and labels.

 

[Chris Ashdown]

For your market , I would suggest getting a good copywriter to make up a standard news release and send it to all the ladies magazines and as many baby type sites you can, costs nothing but postage but can get people looking at your site after reading the info

 

[fisicx]

If all they are doing is the logo then it shouldn't be a problem. When they deliver (2-3 days after placing the order) resize the logo right down to a 32px x 32px image and see what it looks like. If it's just a blurry blob tell them to have another go. And make sure there are no colour gradients as this will increase printing costs on packaging and other dead tree products.

Not sure what you mean by copyright for product descriptions - there is no branding on a bit of copy.

 

[Mum&Boss]

For your market , I would suggest getting a good copywriter to make up a standard news release and send it to all the ladies magazines and as many baby type sites you can, costs nothing but postage but can get people looking at your site after reading the info

Is it advisable to send press released by post rather than email? Can you recommend a good copyrighter so I can start enquiring about costs as I have no idea how much this would ideally cost.

If all they are doing is the logo then it shouldn't be a problem. When they deliver (2-3 days after placing the order) resize the logo right down to a 32px x 32px image and see what it looks like. If it's just a blurry blob tell them to have another go. And make sure there are no colour gradients as this will increase printing costs on packaging and other dead tree products.

Not sure what you mean by copyright for product descriptions - there is no branding on a bit of copy.

I will ask this today actually! Thanks

 

[ethical PR]

I wouldn't (unsuprisingly) recommend a copywriter to do your media relations work any more than I would recommend a web designer to do your branding. Copywriters are normally people who write copy for ads, the web, promotional literature etc. They don't normally have the knowledge or expertise to help you gain media and online coverage.

You would be better off with a PR person (not me) who understands your target audience, the media they watch/read/listen to, has relationships with your target media and understands how to use PR - news stories, features, promotions, photo-stories, blog ideas etc to gain you coverage which will help grow your brand awareness and lead to orders.

By the way you never need postage for media information it's all sent out electronically (unless of course you are sending out samples to selected media targets).

 

[Chris Ashdown]

Sorry i disagree postage is always the best medium for initial approach and tend to get read, whilst electronic mail is seldom read from unknown people. You are probably right for email when both parties know each other

 

[ethical PR]

Chris I am sorry but when it comes to the media (which is what we are discussing) you are wrong. The accepted ways of approaching the media if you have a press release, press invite or photo call or other media communication is via email, twitter, phone or in person. We aren't talking about a sales pitch here we are talking about how you interest the media in covering a story.

I don't know anyone who approaches the media by sending them communications via the post, unless as I said you are sending them samples. It is irrelevant whether you know the journalist personally or not, it's about what is the accepted way of approaching a journalist and in the vast majority of cases, where you don't know a journalist, the initial approach is normally via email. This enables the media to receive information about news in a timely manner and also access video and photo's they can download and use to help illustrate a story.

 

[AllUpHere]

@Mum&Boss you really run the risk of confusing yourself if you take all the advice on this thread. It's not always a good idea to get as many opinions on your idea as possible, as some will be conflicting and you will end up getting nowhere. Equally, you are paying for the expertise of a branding company for a reason, the opinions of which are much more likely to be of value than random members of an internet forum who have no access to your market and marketing research data.

For a business like yours to be successful, you need specialist advice that you have paid for. Nobody here can tell you with certainty if the branding company are doing well or not, without access to an awful lot of information.

For info regarding costs you may have forgotten this forum is great. For specific marketing and branding direction, there are much better places to go.

 

[fisicx]

[Equally, you are paying for the expertise of a branding company for a reason, the opinions of which are much more likely to be of value than random members of an internet forum who have no access to your market and marketing research data.

Indeed, but all this branding company are doing is a logo. And as we both know this isn't that important. What @Mum&Boss needs is marketing help. And I choose you (or at least I would if I needed your help).

 

[AllUpHere]

Indeed, but all this branding company are doing is a logo. And as we both know this isn't that important. What @Mum&Boss needs is marketing help. And I choose you (or at least I would if I needed your help).

I completely agree with the points you make, but I would hope the OP was past the initial marketing consultation phase if she has already instructed a branding company to do their thing. If the branding phase has begun before marketing research and strategic planning has been carried out then I shall go back to my 'go to phrase' of putting the cart before the horse. Actually, in this scenario the OP may as well have taken the wheels off the cart, and shot the horse.

 

[ethical PR]

Poor horse

 

[AllUpHere]

Poor horse

I wasn't going to kill the horse, I was going to put it in the cart. I killed it for dramatic effect. Sorry.

NB. No horses were hurt in the writing of this post.

 

[Chris Ashdown]

I will have a couple of steaks please

 

[Mum&Boss]

@Mum&Boss you really run the risk of confusing yourself if you take all the advice on this thread. It's not always a good idea to get as many opinions on your idea as possible, as some will be conflicting and you will end up getting nowhere. Equally, you are paying for the expertise of a branding company for a reason, the opinions of which are much more likely to be of value than random members of an internet forum who have no access to your market and marketing research data.

For a business like yours to be successful, you need specialist advice that you have paid for. Nobody here can tell you with certainty if the branding company are doing well or not, without access to an awful lot of information.

For info regarding costs you may have forgotten this forum is great. For specific marketing and branding direction, there are much better places to go.

I do thank you for your input. After reviewing the comments, I did take a step back and review my situation. After a eye opening conversation with a forum member, I did realise a few things.

The branding company have helped me position the company, design the logo and labels. They have made some suggestions for marketing but it's not something they get involved in directly. I now feel I have been robbed slightly, but it's done now, no need crying over spilt milk.

It's clear to me that I need to start thinking of things such as PR and taking a closer look into paid and non paid marketing activities and once I have concluded what will work best for my business, I will have a better understanding on costs. One thing is clear, I do not understand AdWords at all so when enquiring about AdWords, I was unable to answer simple questions such as how much would I be willing to spend per customer on PPC campaigns. I don't know how to work this out so I can only guess. I think I'll take some time out to understand marketing better before doing anything else!

 

[AllUpHere]

I do thank you for your input. After reviewing the comments, I did take a step back and review my situation. After a eye opening conversation with a forum member, I did realise a few things.

The branding company have helped me position the company, design the logo and labels. They have made some suggestions for marketing but it's not something they get involved in directly. I now feel I have been robbed slightly, but it's done now, no need crying over spilt milk.

It's clear to me that I need to start thinking of things such as PR and taking a closer look into paid and non paid marketing activities and once I have concluded what will work best for my business, I will have a better understanding on costs. One thing is clear, I do not understand AdWords at all so when enquiring about AdWords, I was unable to answer simple questions such as how much would I be willing to spend per customer on PPC campaigns. I don't know how to work this out so I can only guess. I think I'll take some time out to understand marketing better before doing anything else!

If you fancy a chat to bounce around any ideas or you want a shove in the right direction, feel free to get in touch. I don't take businesses like yours on as clients, so there will be no conflict of interest for me to give you a few pointers.

 

[Mum&Boss]

Thanks