No matter what people tell you, running a business isn’t cheap. Of course, there are ways to cut costs here and there, but in addition to the expenses you already know about, you’ll likely face a number you haven’t even considered. It’s these costs that sneak up on you, ruin your bottom line, and wreak havoc on your company. Proper money management is often the difference between business success and business failure, so here are some hidden costs to plan for.
Employee Turnover
Although you’ve probably already budgeted the cost of hiring and employing your staff, you might not have considered the costs involved when team members leave your company. You’ll have to conduct another interview and hiring process, train your new employee, and contest any benefit claims your ex-employee may bring up. For this reason, a stable workforce is always ideal, which means keeping your employees happy and showing that you appreciate their efforts.
Legal Fees
No one goes into business expecting to face a lawsuit, but there’s no point in ignoring the fact that it could happen. Even if you’re not at fault for anything, bogus lawsuits can still lead to higher insurance rates and settlement costs. You might also miss out on rewarding opportunities due to the time and attention you’re having to spend handling your legal troubles. To make this easier on yourself, you should hire experienced legal advice the moment you begin your company.
Administrative Expenses
Unless you’re running your company out of your home, you’ll have to choose to buy or rent an office. This means paying for a mortgage or rent, gas, electricity, and water every single month. You’ll also need to purchase equipment, like computers, phones, and printers. Depending on your needs, you may even require portable printers, like the ones from Reiner UK. Unfortunately, that’s not all, as you’ll also need to stock up on office supplies, like pens, paper, and pins.
Product Shrinkage
Any business that handles products, regardless of the size, is going to face shrinkage at some point. This is when products are lost, stolen, or damaged before they can be sold to your customers. Although it is difficult to eliminate shrinkage completely, there are a number of ways to reduce and prevent it. This includes installing proper security equipment, training your employees to spot suspicious individuals, and improving your product management.
Business Insurance
Most companies require very little insurance when they first start out, but this can change incredibly quickly. In the world of business, disasters occur on a daily basis, which is why you need to make sure that you’re protected at all times. Although you won’t need every type of insurance, there will be plenty that you do. Of course, deciding which ones you require and which you don’t can be confusing, which is why you may also need to hire professional advice.
Money makes the business world spin around, which is why you need to keep track of yours. When planning your budget, make sure that you include the hidden costs listed above.
*This post has been written for Morning Business Chat by an outside source
