8 Hidden Costs of Running a Small Business
If you are planning on starting your own business, you are no doubt excited about what lies ahead.
It goes without saying that you need to plan meticulously for this significant event in your life, and one area that needs to be expertly assessed is your finances. If your budget is not accurate, you are setting your business up to fail.
To help you prepare your budget, read on to discover some of the hidden costs associated with running a small business:
- Credit card fees – If you give your customers the option of purchasing a service or product with a credit card, it is important to be aware of the fees you could be subject to. Depending on the type of credit card used, you can expect to pay roughly three per cent in fees.
- Maintenance – A lot of business owners fail to incorporate office maintenance costs into their budget. You will need to include everything from fire alarm servicing to cleaning costs into your plan. Remember, maintenance activities often fall into the bracket of health and safety, and so you could find yourself on the wrong side of the law if you do not uphold your duty to provide a safe work environment.
- Professional services – Not only do you need to consider maintenance, but also you also need to factor in professional services; for example, accounting and legal services. These specialists can save you a huge amount of time and money in the long run.
- Payment delays – Payment delays can seriously hurt your bottom line. Overdraft charges and bounced cheques will also have a negative impact on your credit rating. This is why you need to ensure you have control over your cash flow. Issue invoices in a timely manner and ensure your payment terms and conditions are clear and outlined from the offset.
- Insurance – At a minimum, you are going to need both public liability coverage and employer liability coverage. However, it is also wise to carry insurance cover for injuries, illnesses, property, and negligence.
- Equipment and upgrades – You have probably already considered the tools that are required for you to run your service or create a product. But you may have overlooked smaller equipment costs. Remember to include basic office equipment in your budget – for example, scanners, chairs, desks, paper, copiers, and computers.
- Office space – While you will have factored in the office space you are going to rent, the real question is; do you really need all of that space? Could you save money by opting for a smaller office? Or, would it be possible to run your new business from your home? A home office works for a lot of startups in the beginning. Of course, this does not apply to everyone, but it is something worth thinking about.
- Time – Time is one of the most damaging business costs as it is hard to quantify. However, it’s quite simple; if you are wasting your time and energy on a task that could be given to another employee, you could be costing your business money.