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How much does it cost to start an online business in Australia?

Startup costs for online business

Thinking of starting an online business but not sure of the cost and processes involved? While these can vary greatly depending on your business structure and offering, there are a few essentials you should know about. Read on to get an understanding of your options…

1. Business Name Availability

First thing you need to do is check the availability of your preferred business name. You can check this for free on the ASIC Connect homepage. Head to where it says ‘Search ASIC Registers’ and select ‘Check Name Availability’ from the drop down menu. This will tell you if anyone else is currently using your business name.

You then need to check if it’s available as a domain name for your website and email addresses as well as a handle for your preferred social media platforms. You can check all these in one go with this handy tool.

Finally, it’s important to undertake a trademark check. You can do this for free here or to be extra diligent, engage an IP lawyer.

Once done and if you’re happy with your business name availability, you can proceed with your ABN and business name registration.

2. ABN and Business Name Registration

Your ABN (or Australian Business Number) is a unique 11 digit number that identifies your business to the government and community. You can apply for an ABN for free here >

You can also register your business name at the same time. This costs $36 for 1 year or $85 for 3 years for sole-traders and companies.

If you would like to register your business as a company you will also need to pay a company registration fee for which you will receive an ACN (Australian Company Number). This starts at $479 but can go up to $2000 depending on the type of company you would like to be structured as.

We strongly recommend you seek professional advice to determine what business structure works best for you and the tax implications involved.

3. Domain Names

We already know your preferred domain name is available from Step 1, now it’s time to secure it. There are many domain registrars around so you really need to do some research on what registrars work best for you.

Some important factors to consider include:

  • Easy transfer of your domain to another service provider
  • Costs associated with transfers and renewals as well as additional fees that might apply after the first year
  • Responsive support – check reviews for this
  • Drop catching service so that you are always notified before a domain expires

Many providers bundle domain name registration with other services such as web hosting. This is convenient as you can manage all your website products and services under one roof.

However, if you have not yet decided on your hosting provider but would like to secure your domain name as soon as possible (which is highly recommended to avoid someone else snatching it up) head to a reputable domain registrar where you can register a com.au domain from approx. $18 for 1 year or $75 for 5 years.

You can then transfer your domain name to your web hosting provider when you are ready, or you may be happy to leave the domain where it is.

4. Trademarking your Business Name

Even though registering your business name means it’s registered nationally, it doesn’t mean another business can’t operate with a similar name. If you require exclusive trading or branding rights for your business name, you need to trademark it.

You can do this yourself at ipaustralia.gov.au either as a Standard Trademark Application or via their TM Headstart service. One of the main advantages of using the TM Headstart service is that you get a pre-assessment of your trademark before filing for it, potentially saving you time and money down the track.

Trademark fees vary based on how many classes you wish to include in your application. The minimum cost is around $250 per class and most small businesses only need one or two classes. If you want to use the TM Headstart service you’re looking at a minimum of $330.

Once registered, your trademark is protected for 10 years in all Australian states and territories.

Seek out an Intellectual Property specialist if you are not confident in the trademark application process as you will not be properly protected if you get it wrong.

5. Equipment

Although business overheads have significantly reduced since the arrival of the Digital Age, you still need to factor in the cost of equipment in your startup budget.

Obviously an online business needs a relatively powerful computer as well as associated accessories such as keyboard, mouse pad, hard-drive devices, printer, desk and chair.

The costs for all these vary considerably based on your needs and also what you may already own. But to give you a rough idea, a 15 inch MacBook Pro costs approximately $4000 plus an extra $300 for matching keyboard and mouse. A mid-range colour laser printer costs approximately $400 and hard drives for backups cost anywhere between $50 to $1000 depending on the amount of storage you need.

 6. Internet Access

One of the most important requirements for your online business is to have fast and reliable internet access. Luckily with the rollout of the National Broadband Network (NBN) almost complete, this essential item is achievable and relatively affordable.

Monthly prices vary based on the service provider, the speed of internet and the amount of data you use, however as a guide, a 200 GB Telstra NBN plan costs $75 per month with $216 upfront costs.

One way to bundle your internet access with some of your equipment costs (such as desk, chair and printers) is to join a co-working space. These are popping up all over the place and range from $200 a month to over $1000 depending on how much space you need.

They’re a great way to network with many solopreneurs, freelancers and small businesses operating from them. Other benefits may include the use of meeting rooms, mail services and networking events. It’s a great option particularly if you work from home and feeling a little isolated.

7. Web and Email Hosting

We touched on this before when discussing domain name registration and the reason we recommended securing your domain name before deciding on a hosting provider is because it can be very challenging (and therefore time consuming) to choose one.

There’s a lot of information to digest, especially if it’s your first website. To make things more complicated, most providers don’t package their services in a way that’s easy to compare.

With that in mind, be prepared to spend some time researching what features will work for your website’s needs. Some factors to consider include:

  • How large is your website and how much storage do you need?
  • How much traffic do you expect each month?
  • What are your current website management skills and what services might you need help with?
  • Other features you may need such as SSL certificates and backup/security plans
  • Is there a difference between sign up costs vs renewal costs?
  • Is there a refund policy?
  • Can you easily navigate and use the control panel?

You should, of course, also check reviews for general customer service, internet speed and reliability as well as and how quickly you can access support.

To give you an idea of cost, expect to pay between $5 and $10 a month for your first year with prices going up to $15 to $25 a month after that.

If your website is complex with lots of high res photos and videos you may need to purchase higher level plans ranging between $30 – $50 a month (plus extra if you require additional products and services)

8. Software and Subscriptions

Software costs can be a bit sneaky especially with the rise of SAAS companies. It’s very easy to sign up for a free 30 day trial and then get stuck paying a monthly subscription fee for something you rarely use. (Been there, done that!)

Having said that, there are some fantastic and extremely valuable apps around that will serve your business well. Just be sure to do your due diligence and (unless absolutely vital to your business) turn automatic renewals off. You should also keep track of the free trial periods and familiarise yourself with the terms of each app/software you sign up to.

The different software and subscriptions your business needs depends entirely on your business. Some ideas to consider include cloud storage services, bookkeeping software, photo editing apps, graphic design software, marketing software, photography subscriptions, copywriting subscriptions, social media planning apps and website plugins. These can range from a few dollars a month to over $50 a month.

9. Branding

Unless you are a professional designer you really should invest some $ into your branding. Most markets are crowded (to say the very least!) so if you want your business to survive you need to stand out from the crowd, look professional and most importantly capture your audience.

An experienced graphic designer, whether freelance or agency-based, can help translate your vision for your business into a compelling brand that resonates with your target audience. If you are on a tight budget, you could look at getting a basic brand kit developed. This usually includes a primary logo, a secondary logo (or submark), fonts and colour palette as well as 1 or 2 social media graphics to get you started. Try and keep things simple to start with and then build on them as your business grows.

Graphic design services for the above range from about $500 to over $2000. It’s important to do your research and choose someone with the experience you need and a style you like as well as someone who understands your vision. It’s really not an area you should scrimp on and quite often, effective and engaging brands take time to develop so be patient and enjoy the process.

Professional copywriting is equally important for your brand. Some design agencies offer these services as well or they may have a copywriter they outsource too. Don’t forget to factor it in to your branding budget.

10. Website

The design and development of your website is another cost that varies greatly depending on your needs and skill level. You can buy WordPress templates for as little as $10, however you also need to know how to install, design and manage them yourself.

With abundant tutorials available online, this is definitely achievable however if it’s not something you’re interested in (and your time could be better spent elsewhere) it might be worthwhile outsourcing to a web designer. As the saying goes – do what you do best and outsource the rest!

In another scenario, you may actually love designing and creating pages in a website builder, however you realise you need some advanced custom coding to get your website to function to a level you would like it to. In this case, you should outsource to a web developer.

Some website builders (such as Squarespace and Shopify) offer fully-managed web services include hosting, domains and SSL certificates in their plans. This is great if you want to keep everything under one roof and don’t require anything too complex.

If your online business requires lots of data entry or management, you might need help from a virtual assistant or marketing expert. Most websites definitely need a little SEO (ie. search engine optimisation) love so you may need to familiarise yourself with the basics or engage an SEO expert.

If you have a completely unique online business idea, you will probably need to get your website custom designed and built from scratch which could cost hundreds, if not thousands, of dollars.

The ultimate goal with your online business is to decide what your MVP is (minimum viable product) and spend the least amount of money possible to get it developed. Once you determine it’s viability, you will be comfortable investing more dollars towards it when the time is right.

11. Marketing

There’s no point building something online if no-one visits your website. When you are ready to go live with your business, you will need to spend time and most probably money, into marketing it.

The best marketing strategies these days involve developing lots of content. This is where you create valuable, practical and/or entertaining content and post it on your website (usually a blog) and then cross promote it on your social media platforms. The idea is to build brand awareness, drive traffic to your website and ideally make some sales. You should always have a strong call to action so that readers know what you would like them to do next.

You can DIY this if you are good at writing and have some basic photography skills, however it is a lot more time consuming than you probably realise. Social Media Managers, Content Creators and Virtual Assistants can help you with this if it is not in your zone of genius. Pricing varies greatly depending on the level of services you need but most offer a variety of set-priced packages starting around $200.

There is of course, also paid advertising through Google, Facebook, Instagram, Pinterest and Linkedin. You can run ads for as little as you like however you will obviously get more reach/views if you put more $$ towards it. Start off by investing $20 or $50 on a selection of ads and see which ones yield the best result. You will then know which one to invest in down the track when you are ready to spend larger amounts on advertising.

12. Insurance

In most online businesses you will need to purchase professional indemnity insurance. Generally speaking, the riskier the advice your business provides, the higher premiums you will need to pay.

For example, professionals providing investment, legal or medical advice will pay higher premiums than graphic designers, interior designers and bookkeepers as the financial or health risk to the recipient is higher.

The required level of cover also determines the cost with most insurance companies providing cover for $1 million, $2 million, $5 million, $10 million and $20 million. A sole trader will also pay a much lower premium than a company with 12 or more employees.

It’s up to you to decide what level of cover you need. As a guide, professional indemnity advice for sole traders providing low risk advice starts from approx. $350 per year.

Other things to consider

Do you need licenses / permits / patents / rent  / utilities  / training or certification / other types of insurance / accounting or legal services? Don’t forget to consider these when planning your startup budget. All businesses are unique so do your research to decipher what you need to get your MVP up and running.

Finally

The monetary costs shared here do not reflect other costs involved in starting a business such as the significant amounts of time and effort involved. This often leads to the loss of a steady income from a paying job as well. Be sure to keep this in mind when deciding if the entrepreneurial journey is for you. There’s going to be lots of up and downs – and the risk of failure is a high – but if it’s one of your life-long ambitions, the fact that you had the courage it give it a shot is quite often enough reward.

 

 

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