The Hidden Costs Behind Building Your Business | Ariya Chittasy
Are you ready to build your new business?
The biggest question that you might have before starting your venture is “what are the costs that I have to budget for?”
Now, one of the biggest temptations that you may have as an entrepreneur is to jump straight into building your new product. You might be so excited that all you want to do is see your idea become reality. The problem with this is that you might not have taken the time to plan out each element of your budget, and you might get surprised by all these hidden costs that you didn’t plan for.
So what are the important things that you have to consider before building your business?
You need to firstly have a business plan
Now, you’ve probably heard this term many times before, so much so that you might think “this is just a document that everyone has to make, just for the sake of it”. Let’s think about it simply: “what needs to be answered in your business plan?”
- Does this business have what it takes to be self sustaining and profitable?
- Are there enough customers in my target geography to make it worth the effort?
- Is there enough of a demand for my product in the market, or is there a limit to how well my product can perform in my chosen geography?
- Is all the money that I will invest in this product build be wasted?
Design & Development
Next you have to carefully consider the design & Development stages of your product.
When it comes to designing your product, it is tempting to approach a software developer, tell them what you want and hope that they build everything. If you take this method, and rely on this one developer to build your entire product, it is very unlikely that you will get the outcome that you want.
Firstly, you have to find a UI/UX Designer to draw the blueprint of what you want to build, same way as an architect would draw a design before a builder comes and creates your house.
- How many screens would your product have?
- The user journey
- Will the user enjoy the product?
- Is your product easy and simple to use for the user?
After you have this “blueprint” of your product, it’s time to move into your development.
- How long is the average development phase?
A good average that we have seen is 60, 90 or 120 days to build your first version of your product.
- 60-90 days of development will give you a good benchmark to see something that is not too basic, just a simple product but it might not have all the features that the customer needs.
- Above 90 days of development will give you an over-developed product, and you might have spent too long in development. This will mean that you have not spent enough time on market R&D to know if people really want your product.
In short, you don’t want to under-develop, but also not over-develop!
Any other hidden costs to budget for?
The last thing that you will have to consider is the overall cost of building your product. A good guide to go off is, the average cost of starting a tech startup is around $75,000 USD. We say that it will cost around the same as it would if you were to open a restaurant, but the difference is instead of being able to serve a few hundred customers, you are building something that, with the same initial input and effort can be used to serve millions of people.
It’s important to plan carefully for the potentially hidden costs of designing and developing your business. The last thing you want to do is jump straight in to building, get half way through the development phase and be hit with thousands of dollars worth of costs that you never saw coming.