Starting up a business is exciting, but can also be challenging along the way if you don’t list out the things that are required to startup and run the business. Every business has a startup cost and the dropshipping business model is no exception. An essential part of starting a new business is to calculate your low cost startup costs. It comes with a lot of benefits including securing startup funding and estimating short- and long-term profitability. In case you stumble upon this article as a new entrepreneur, you will learn how to calculate your startup costs for dropshipping business.
A startup cost is any expense incurred when starting a new dropshipping business. It is an essential part of your sales and business plan that should not be joked with. A lot of businesses have folded due to the owner’s inability to calculate startup costs. Estimating small business startup cost is important for your financial security. Besides, new businesses need startup costs so you won’t run out of capital and halt your business. startup costs may vary depending on your business type. For instance, starting up a new restaurant will require you to pay to rent a business space. On the other hand, you may not need to pay for a business space when starting a dropshipping business, as it can be home-based.
What are Startup Costs
startup costs are expenses for a new business. The amount is dependent on the type of business that you want to establish. It could be as little as $3280 or as high as $1,000,000. There are several businesses with low startup costs; however, this article focuses mainly on startup costs for dropshipping business. In the dropshipping business model, it is common for new marketers to ask “how much does it cost to startup?” Low cost startups are used to run a few dropshipping expenses. Here are some startup costs examples:
· domain name registration
· website hosting
· Office utility expenses
· software
· business name registration
· marketing costs
· Equipment costs
· business tax expenses
· Payroll expenses
· Insurance
How to Calculate Your Startup Costs for Small Businesses
So, how do you calculate your startup costs? Here, we have put together ways and steps to calculate your startup costs when launching a dropshipping business. Consider the following low startup cost business ideas.
1. Research
The first thing to do is to research what it takes to start a dropshipping business. You can use search engines to estimate the cost of running a new dropshipping business.
2. Meet with an established business
To save time and effort on research, you can reach out to established businesses that are not competitors and ask the founders questions about what they used to start their business. Most dropshipping business owners will be excited to offer their assistance and make even want to talk to you in person. You can reach out to the business owner via LinkedIn or other social media platforms. This method is accurate as it will give you first-hand information about startup costs for dropshipping.
3. Create a business plan
A business plan is simply an integrated business management process that is mandatory to achieve business goals. It is an assessment of your current sales and a projection of future sales. Creating a business plan is another great way to calculate your small business startup costs. Failing to plan implies planning to fail. A well-prepared business plan contains a section for “financial projections” where you can estimate your expenses, revenue, and profit for the first four years. There are free business templates online that will help you estimate how much capital you need when you seek startup funding.
4. Separate reoccurring and one-time costs
Reoccurring costs are ongoing costs from operating activities such as website hosting, salaries, computer maintenance, the cost incurred in an advertisement, etc. One-time costs should be separated from reoccurring or ongoing-costs within the financial projection section of your business plan. For example, a new computer may cost $233 (one-time cost), but you need to budget around $10 (reoccurring cost) for maintenance every month.
NOTE
When estimating your business startup costs for dropshipping business, you are advised to cover six months’ worth of expenses upfront. This is essential so you don’t get stocked mid-way into your business.
The Best Dropshipping Platform With Low Startup Cost
Now that you know what it takes to start up a dropshipping business, the next important thing to consider is your dropshipping platform. There are many dropshipping platforms out there that offer top-notch services. However, the large number makes it overwhelming to choose among the list. From Amazon to Alibaba, eBay, Craigslist, there is a wide range of options to choose from. While these platforms offer excellent services, they may be either too complicated or too expensive for small business start ups. SaleYee.com is a dropshipping platform that is neither complicated nor expensive to start up. It is a low cost startup platform that encourages new online marketers. They offer over 30, 000 profitable SKUs, selling from hundreds of categories including toys, electronics, clothing, accessories, gadgets, homeware, lighting, and so on. SaleYee dropshipping platform can save startup costs on inventory, warehouse, shipping, and customer service. Through big-data research, you can get weekly reports about your store. Getting started is easy, just sign up at SaleYee.com and have your store.
Conclusion
For those dreaming big, dropshipping business is a low startup cost business idea that can profit you. This article provides detailed information on how you can accurately estimate startup costs for your dropshipping business. So, what are you waiting for? Start preparing your sales plan for your small business so you can request funding and attract investors.