How much does it cost to launch a startup?

Do you want to start a business but you’re unsure of the costs involved? 

Many female founders come to us with a great idea but aren’t sure about how to get started or what the costs of getting started are. 

At Atto, we support early-stage female founders to build tech companies. And we encourage them to use no-code or low-code tools so that they can test their product quickly, get feedback and ideally start generating revenue early on. 

There’s lots of debate around the different funding models for startups, and how to just get started. In the early stages, there are many resources for founders, many options for tools to use, and a variety of communities to support you throughout the journey of building a startup. 

But what new founders really want to know is – what does it cost to fund my startup in the early stages? And what are those early-stage costs?

Let’s break down the startup costs involved in creating a new business.

TLDR: Most founders could cover their basic business startup costs for <$5000. 

Below we review:

1. Incorporation

2. Office Expenses & Equipment

3. Software & Cloud Services

4. Events & Education

5. Freelancers & Consultants (incl. Developers)

Please note: this guide is focused on Australia as an operating country and does not include any full-spec product build or ongoing costs.

1. Incorporation 

Cost: ~$500-$1500

If you aren’t already incorporated, one of the first things you can do when you’re wanting to start a business is set up a company and pick a business name. While it’s great to stay lean ops-wise early on, having the right foundation from the get-go is vital as you scale so you don’t run into any hazards (like having to change your brand because someone already owns the trademark or a ‘cofounder’ leaving the company after a few months and walking away with 50% of the equity!).

Once you’ve decided on a name, you need to make sure that you’re able to register the business name - as well as secure a suitable domain name and the correspondinging social media handles. 

The Australian Government have put together a brief checklist for new business owners that includes:

• Choosing a business structure 

  • Company, Sole Trader, Partnership, or Trust  

• Registering for an ABN and registering for GST 

• Registering your business name with ASIC 

• Choosing insurance 

At this early stage, it’s not vital to engage an expensive accountant and/or lawyer to get expert advice on how you should set up your business. However, you do want to invest here to get the foundation right. There are services such as LawPath and firms such as Luna that offer affordable incorporation packages.

To incorporate a business in Australia to become a registered company (the recommended entity structure for tech startups), it costs just over $500 - with some ongoing accounting and legal requirements with that too.

2. Office Expenses & Equipment  

Cost: ~$0 (*$1000s if you are starting from scratch)

Most people already own a mobile phone and laptop or desktop computer – and have access to a place to work (home or coworking space) and the internet so you shouldn’t need to make too much investment here.

If you need to upgrade your machine, check out eBay or Facebook Marketplace for some secondhand laptops. Your local library is also a good place to use the net if a coworking membership is out of the budget for now.

You might get super excited about starting your business and want to order branded merch, however, ditch the order of 100 t-shirts for now and go with a cheaper option such as stickers instead.

3. Software & Cloud Services

Cost: ~$0-$500

There are thousands of tools on the market now that support business owners online. Over the past decade, startup costs have dramatically reduced due to the advent of cloud services and SaaS. That said, software subscriptions, cloud storage, and hosting can quickly add up each month (and you will want to regularly review these costs while running your startup).

Lots of services offer free or entry-level plans now or there are usually cheaper alternatives while you’re just starting out. You might not need that fancy CRM when you could just use Google Sheets – or try a free trial before making the full commitment.

There are many suggested tools for tech-based startups - so assess your unique needs.

• If you need to register a domain name, check out Hover, Crazy Domains, GoDaddy, Amazon or Namecheap.

• If you’re setting up a landing page or website yourself, consider using tools like Caard, Webflow, or Usmo. If you want more features and an easy way to integrate a CMS or CRM, check out WordPress, Wix, or Squarespace. 

• If you’re going to be sending lots of branded emails, consider setting up an email account on your domain name instead of an unbranded Gmail account (eg. hello@atto.vc). 

• If you’re going to be sending lots of newsletter emails, consider what email marketing platform you’ll likely use as you scale. In the beginning, make the most of the free tiers for small customer lists with tools such as Mailchimp or Convert Kit.

• If you’re going to be scheduling lots of meetings, think about scheduling tools such as Calendly, Acuity or YouCanBookMe. 

• Depending on your finances, some businesses sign up for financial management software from day one to avoid any accounting errors once you start to experience some growth - such as MYOB, Xero, or Sage Accounting.

4. Events & Education

Cost: ~$0-$1500

When you’re starting out, it can be a good idea to join founder communities, attend business events and conferences, apply to accelerators as well as invest in startup programs and courses. You’ll save a ton of time and money by learning from people who have already been there and done that – and networking with fellow founders can help you in the future when it comes to things like fundraising.

Joining the Atto community is a great first step. Many early-stage founders find our Academy and Accelerator programs super helpful when they are first launching their business and again when they run into challenges with scaling.

5. Freelancers & Consultants 

Cost: ~$0-$1000s

We’ve mentioned the costs of engaging accounting and legal experts above, however, you likely will also need the help of other consultants and freelancers when you get started. If you’re non-technical, your biggest challenge might be building a product or app to go to market. At Atto, we big champions of the lean-startup movement and customer validation prior to building a product. There are too many examples of early-stage startups that have failed after spending lots of money to develop a really great product - before they tested it with their audience. They might have even spent $50,000 to $500,000 on a product and then failed to attract customs or make any revenue.

There’s a well-repeated phrase in startups from Reid Hoffman, founder of LinkedIn who said: “If you're not embarrassed by your MVP, you've launched too late.” When you build, test, and learn quickly, you’re more likely to know you’re building something that your customers actually want and are willing to pay for. 

At Atto, we’re all about using low code or no-code solutions to test your ideas. And there are amazing tools that can help you do this at a low cost and with minimal effort. 

And there are definitely options if you’re not confident with creating an MVP yourself - but of course, there are pros and cons to each.

Options for building an MVP: 

• Use no-code or low-code tools, like Bubble, to build a basic model and generate revenue 

• Hire a web or app developer off a freelancing platform like Upwork (vet heavily though)

• Join an accelerator program and supports you to build your tech 

Making a small investment in customer acquisition can also be useful to build out your CAC (Customer Acquisition Cost). When you’re starting out, popping a few hundred or thousand into a Facebook, Instagram, or Google Ad can be worth the investment.

There’s no one right way to build a business.

All-in-all, you can launch a startup with very little funds in today’s world – the stories you hear about people raising millions prior to launching are incredibly uncommon. You can make a fair dent with around $5000. Working smart, focusing on customers, staying lean and getting the right advice from the right people will take you far.

At Atto, we encourage founders to use the ‘indie way’ to build independent, sustainable and scalable startups. That way you can build your startup on your own terms and continue to make decisions based on your values.

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The 2021 Atto Accelerator is open for applications from July 1st. If you’re interested in joining this year’s program, please fill out an EOI here, or sign up to our newsletter list to be notified.