Free Essay Example. Business Costs

Published: 2023-03-30
Free Essay Example. Business Costs
Type of paper:  Essay
Categories:  Business Financial management Microeconomics
Pages: 3
Wordcount: 609 words
6 min read

Business costs include all expenses an organization occurs when carrying out its activities. They include fixed and variable costs. Many start-up businesses incur high costs (Pamir, 2019). Therefore, they must identify sources of funding so that they can start and manage their businesses successfully. Entrepreneurs use budgets to identify and allocate resources effectively. The essay discusses essential business start-up costs.

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When developing a business start-up budgets, entrepreneurs must consider critical elements, such as insurance costs. Every business must have insurance covers, depending on the industry it operates. Examples of insurances include product, error, and commercial property. Insurance covers improve the reputation of the business and will attract many investors (Pamir, 2019). The other business cost is license and permits. Depending on the location of the business, it needs various types of licenses, such as municipal, federal or state licenses. In most states, businesses renew their licenses annually. They must consider other licenses, like import permits. Therefore, the nature of every business determines the types of licenses to take.

There are also marketing costs and this involves all expenses incurred as a result of promoting business and its products and services. The article argues that at the start of every business, they must incur high costs as a result of promotions since they must create their awareness. It is worth to note that new companies have strict margins; hence, the need to create budgets carefully so that they can carry out their activities effectively (Pamir, 2019). Additionally, the article argues that every business must acquire assets and equipment to run smoothly. However, types of equipment required depend on the type of business, but it is the first consideration all businesses take into account since it cannot conduct its operations in a vacuum.

The article has managed to cover important aspects of business costs all businesses should put in place to run operations smoothly. It has specified different requirements for different businesses in different states. Although it has identified some businesses costs, it did not exploit all costs, such as cost of materials and startup capital (Pamir, 2019). Also, the article failed to categorize business costs accordingly, such as variable and fixed costs. Notably, all businesses should strive to reduce the cost of operations because of harsh economic conditions so that they sustain their operations.

Furthermore, the article has connected various concepts of microeconomics. First, organizations and entrepreneurs must make informed decisions regarding the allocation of resources so that they exploit identified opportunity without compromising their goals (Besanko & Braeutigam, 2010). For example, when developing a budget, every entity must prioritize their needs and avoid activities that have less value because of financial constraints. Fundamentally, factors of production are scarce; suggesting that identifying and managing business costs would contribute to the outcomes. Regarding the purchase of raw materials, organizations must consider demand and supply changes and stock adequate resources required to avoid incurring unnecessary costs (Boyes & Melvin, 2015). Therefore, managers must consider changes in the business environment and execute appropriate and sustainable operations.


The article "Business Startup Costs You Can't Afford To Overlook, "by Pamir Eren identifies various business costs that every startup company must take into account. Although it does not provide adequate details, it identifies various costs required, such as licensing, and assets. Essential factors businesses should take into account when allocating resources include scarcity, demand, and supply. Since the resources are scarce, allocation depends on prioritization.


Besanko, D., & Braeutigam, R. (2010). Microeconomics. New York: John Wiley & sons, Inc.

Boyes, W., & Melvin, M. (2015). Microeconomics. London: Cengage Learning.

Pamir, E. (2019). Business Startup Costs You Can't Afford To Overlook. Forbes. Retrieved from

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