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Rough budget for start-up business plan

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  1. #1

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    Rough budget for start-up business plan

    Hi all,

    I'm in the process of writing a business plan for a small research/consultancy-type outfit to be located in Hong Kong. Nothing fancy, modest budget for a place in NT that can accomodate 2 - 3 graduates in a data-entry/clerk/analyst position.

    I know very little about local conditions admittedly, but hoping someone can throw some very rough numbers or hints this way. In particular, I suppose I need to mention the following:

    Physical requirements:
    Office size, office grade (?), zoning (?), utilities/internet

    Occupation expenses:
    Rent, utilities, insurance, maintenance (?)

    What about the legal environment?
    Permits/Health and safety/Personel insurance coverage...?

    Also, what markup is typically used here for "social costs" over and above an employee's gross salary?

    I appreciate any help!


  2. #2

    Join Date
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    Depending on what phase you are in (and type of business) - you should also have a look at some of the Science & Tech parks (Kowloon, NT, etc) which offer great facilities (and support) for startups.

    If you satisfy the admission criteria (and the admission panel) - you can achieve rent-free rentals during your first year and reduced rentals thereafter for 800sq.ft (subject to progress/milestone assessments)

    Refer to www.hkstp.org/incubation. Best of luck!

    roaaad and Geoff like this.

  3. #3

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    That's an excellent suggestion Static, and one that I'll have to look into (not sure we'd qualify as Science & Technology, but who knows).

    I'll probably still need some rough numbers for now, if there are any suggestions out there.


  4. #4

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    InvestHK should be able to help you too. Join The Entrepreneurs Network in HK - lots of techies there and maybe go to Web Wednesday for contacts. TEN is meeting in Wanchai on May 13. Check their site out.

    Check your PM's.

    Last edited by Football16; 04-05-2010 at 03:13 PM.
    static likes this.

  5. #5

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    Rental will vary greatly depending on location, size and services, etc

    For your consultancy your choices would include the usual: standalone commercial property, serviced office, shared office (refer to classifieds), virtual office and residential.

    For rough guide on costs refer to Virtual Office HK, JumpStart, PrimeCenter, Regus and many others...

    "Virtual offices" provide you with a registered address, receptionist, meeting rooms, etc - but you can base yourself somewhere else entirely (if you require that "professional image" at a reduced cost). Again costs vary but typically less than HKD $500/pa + meeting room cost only when required.

    In HK, there are also many other places to locate your business that may seem less glamorous and unconventional, but I would highly recommend to consider them also for cost considerations (ie. I've run businesses out of storage units, and old warehouses / factories).

    And since I get "boo-ed" on these forums for being a stickler for the law, I might as well add, that there are many HK businesses (especially restaurants + retail) that are indeed run out of residential premises due to the high cost of rentals (& licensing). You could combine that idea with a virtual office which many have done where customer on-site visits are rarely, if ever, required (IT consultancy, tech startup, web designers, etc).

    I would always recommend incorporating as a Ltd Co (rather than a sole proprietorship) to limit your liabilities and only look for an offshore entity once business is stable. For a consultancy you should take out Professional indemnity insurance. With an office, you need Public Liability insurance as well. (Not sure of your business, but check out licensing requirements)

    I think Football's resources are excellent starting points to get you going...

    roaaad likes this.

  6. #6

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    Virtual offices won't really help you as the word 'virtual' means you are never there!

    Serviced offices, though are good for you to get onto your business may not suit as they will end out more expensive than setting yourself up. You just have to fix the rent, utilities, furniture etc yourself.

    The cheapest office for 2 i could find was $12000/month in Kwun Tung (didn't check further into Kowloon/NT). You should be able to find an office much cheaper in NT. To price what that would be and quality depends on you. Shop around.

    You will need business insurance. Personal indemity insurance. Mine is $10 million plus some some theft insurance etc for 2 people is $2400 a year but depends on salary of everybody. If you want a contact, PM me and I can send you the one I use at Manulife. They can give you advice but then they get commission for this!!

    For salaries and extras you will need to put in 5% for MPF (super) and the employee will fork out the same. Minimum is $250/month I think and payable after 2 months.

    Check out the Labour Ordiance online as there is plenty of information there or talk to your insurance/MPF guy/girl as that is what I did to get to know what I needed to do.

    YOu can give medical if you want and holidays is generally 10 days after 1 year but law is just 7 days. There is also paid maternity leave here too. But any contract would have to be as per the labour law anyway.

    I give top medicial and phone allowance. Medical is generally about $300-$400/month depending on age. As you have graduates it should be much less. PHone allowance is up to you and would depend on the work and if they need to contactable out of office or need to travel etc. I give $500 a month but i have a marketing executive that is out often. I know other offer alot lower level.

    In terms of salaries you will have to work that out for yourself. I actually just advertised for the position without a figure but requested a level but a strong brief on the job and then i worked out a figure to the person I was looking for.

    The great thing here is personal income tax is looked after by the employee. You give them the gross amount and they do their tax. No withholding etc.

    Just shop around a bit for what you need in an office. Generally landlords see a foreigner coming from a mile off and generally inflate things 20-30% or more. I sometimes use locals for negotiation then come in later to finalise things but generally local hong kongers will get a good deal anyway.

    Good luck, its always exciting and definately challenging starting a new business.

    roaaad likes this.

  7. #7

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    How Ming Factory Building in Kwun Tong has inexpensive actual offices. Oops...not NT so maybe there are good ones there too.

    Last edited by Football16; 04-05-2010 at 11:26 PM.

  8. #8

    You'll probably want to get an office insurance policy as this will cover the property of your office, theft, damages, business interruption, public liability and, legally required, Employees' Compensation insurance. Cost will depend on the sum you're insuring your office for and any stock as well as the salary amounts of the employees. For a small office with nothing really much in it you can budget around HK$1,500 -2,500 p.a.

    If you're renting serviced offices it's usually part of the package.

    Another legal requirement is MPF (Mandatory Provident Fund) a pension fund over here. As their employer you'll need to set up a company MPF for the employees and contribute 5% of their salary into it (contribution capped at HK$1,000 a month). You've got 60 days to set this up for the employee (what Virago refers to as '2 months'). For ease of calculation just assume you're paying it from day 1 of the employee as there is some backdating. There's no minimum or rather it's zero.

    Apart from Employees' Compensation insurance and MPF the rest is up to you, though some would be a good idea depending on your line of business.

    roaaad likes this.

  9. #9

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    That is excellent information. Thanks so much to all so far!


  10. #10

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    FYI our office in Shamshupo Kowloon rental is HKD6,500 per month plus management fee HKD700/month for approximate 500 sq.ft.
    Posted via Mobile Device


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