Many Malaysians have involved in business activities to support their living. Malaysia is currently placed at number 15 in the World Bank’s Doing Business 2019 Report, which comes after Singapore among ASEAN countries. This report signifies that Malaysia does not give much of a hassle when dealing with business procedures like getting the permits, property registration, trading and more.
Although starting a business in Malaysia can be hassle-free, you should not take it for granted. There are some tips that we will explain how much does it cost to start a business in the country. If you want your business to stand strong and do good, you need to understand the real cost of initiating a business.
The cost differs depending on what type of industry you are planning to venture into. Small and big businesses are obviously two separate models. The former will typically cost you a lot lower than the latter. Small businesses like selling products online through social media platform or home-based businesses do not require much of a cost on your side.
The major step before starting a business is to detail out your business plan properly. You need to estimate the expenses and expected profit. Below are some of the tips you should not ignore while drafting your business plan:
Do not waste your time by not doing a thorough industry and market research for your business. You can do consultations with experts if the internet does not serve you much justice on the information you need. Before starting a business, setting up a detailed plan is really important, so do not miss this part out.
Getting loans from banks are common if you want to build a big business. Like other loans, business loans come with interest payments and this must be taken into consideration on all aspects. You can also request loans from private investors like family or friends. When involving in loan, you have to make sure the payments are well-planned as the cost can be high at first. Banks can lend a maximum RM3,000,000 with an interest rate marked at 5% with a tenure of 3 years.
These three requirements should not be missed out when setting up a business. Depending on the industry you are working on, the type of insurance will vary. Same goes to license and permit fees. If you plan to open a food business, health inspection needs to be done before proceeding to get the permit and license. Be reminded that the initial costs for proprietorship will not be the same as a partnership. Some of the costs that will be charged when registering a business include business registration fees, solicitor’s fees, name registration fees and insurance fees.
For an online or freelance business, a premise may not be needed as the business owner can use their own house to run the business. However, for businesses that require a premise to operate, it is important to get a decent place. Some of the tips when considering a premise is to look at the location. A strategically-located premise can typically cost higher than other places. You also need to decide whether you want to rent or purchase the premise. Other costs like renovation, electrical, security system and more will also be added.
If you buy or rent a place for your business, it needs to be completed with equipment and tools to complement the structure. Basic supplies like furniture, cabinet, computerised systems, safety tools and vehicle are all required to run your business. The more equipment you need, the more costs you need to spend.
For a start-up business, it is really important to set aside a marketing and promotional budget. You need to advertise your business really well to attract more customers. Brand awareness is what can help the growth of your business. The marketing strategy may cost you a lot of money, but the money you spent will totally be worth it. Below is the breakdown costs for marketing:
When hiring employees to help run your business, you are obligated to pay them. An amount of salary, along with other benefits like EPF, medical, optical and dental coverage must be given to the employees in return of their contributions. The bigger your business, the more employees you need to hire, therefore the more cost you need to use to compensate your employees.
Technological expenses refer to computers, printers, Wi-Fi, software, photostat machine, telephone and many more that are required for your business. Some of them need to be paid on a monthly basis, so you need to take note in your financial planning.
As for the managing costs, it is best to separate them into two: ongoing and one-off costs. This will help you determine your budget more systematically. You have to consider the cash flow and what to expect in the future in terms of the costs you will spend. Another tip to keep in mind is to always prepare some extra money for any unexpected expenses that could occur.
Building up a business is never an easy task, it requires patience and effort. It is crucial for you to lay out all your plans and strategy so that your business can start up strongly.