The decision to start a business is not a simple one. Although it can seem like it in the moment, there is a lot that needs to be considered, from the workload to the thoughts of your family. You also need to plan for the cost. Despite what some people say, launching and running a company is never cheap. What’s worse, it’s often much more expensive than you first imagine. In addition to the obvious expenses, there are a number of unexpected ones that can sneak up on you and ruin your finances. To prevent this disaster, here are ten costs you may not have considered.
Before you can even start your business, you need to decide exactly what it is that you want to sell. Although some people already have an idea at this point, others may not. To give yourself some inspiration, you will need to conduct research, identifying gaps in the market. If you have a business idea already, you will still need this research to validate it and find customers. Whether you do this research yourself or hire an agency, you should prepare to pay hundreds to do it well.
Considering most businesses begin at home, many entrepreneurs assume that they don’t need insurance. Unfortunately, this is unlikely to be the case. Even without any customers or employees yet, you’ll still need to protect any equipment or products for your company. Unbeknownst to many, this won’t be covered by your home insurance. As your company starts to take off, you’ll need other additional policies, like general liability and worker’s compensation.
In the very beginning of your business, it helps to be connected. This is why so many entrepreneurs spend time at networking events and engaging with other business people online. Another great way to put yourself out there is by linking up with a trade association. Unfortunately, this method isn’t free. The memberships for these industry associations can easily cost hundreds, so it’s important that you choose the right one for you and your company.
There comes a time for every business owner when they can no longer do everything themselves. It’s at this point when you’ll need to start looking into bringing on additional help. However, with job promoting, interviews, tests, training, and more, the hiring process is far from free. Even if you don’t spend money on certain stages, you’ll still need to consider the cost of your time. This is why so many entrepreneurs outsource work before they build a team.
No one goes into business planning or expecting to face a lawsuit, but there’s no use in ignoring the possibility. Even if you’re not to blame for anything, bogus lawsuits can still waste your time, as well as increase insurance rates and lead to settlement costs. To limit the negative impact of these issues, you should hire professional legal advice from the moment you begin your business. In addition to assistance with legal troubles, they can also help you to avoid them.
After spending so much time and money recruiting new talent, the last thing that you want this for them to move on to another company. This means you’ll have to face the costs of the hiring process all over again, as well as pay for someone to cover their workload in the meantime. High employee turnover is a problem for companies far and wide, but it doesn’t necessarily need to be for you. If you create a positive and rewarding work environment, new hires won’t want to leave.
Keeping your employees happy doesn’t always have to cost money, but no one can deny that it sometimes does. To show your appreciation for their work and keep turnover down, you’re going to need to find ways to reward your team. While a simple “thank you” will suffice in some circumstances, in others you may choose to offer a cash bonus, paid days off, or a small gift. You will also need to provide a competitive and comprehensive benefits package.
When a business handles products, regardless of its size, there’s going to be a risk of product shrinkage. This occurs when products are stolen, damaged, or otherwise lost before they can be sold to customers. This is a major issue in the retail industry, costing millions every single year. While there are ways to reduce shrinkage, such as by installing better security equipment and improving product management, there is no way to eliminate this issue as a whole.
All businesses need some sort of equipment to keep them up and running. Computers, tablets, and other office technology are fairly common, but there are also more expensive tools required in different industries. Everyone starting any type of business understands that they’ll have to pay for this equipment, but very few entrepreneurs consider the cost of maintaining it. While this is cheaper than replacing your gear, it’s still an expense that will need to be budgeted for.
As one of your most valuable resources, no one can deny that, in the world of business, time truly is money. This means that when you waste the few hours and minutes you have each day, you essentially take money out of the wallet of your company. With that in mind, many businesses invest in finding ways to make processes and the company as a whole more efficient. This might mean investing in better equipment, bringing on more staff, or even moving.
Launching a new business is an exciting prospect, but you should not allow that to overshadow the finer details. Companies need money to survive, which means that, if you manage yours poorly, your business may not be long for this world. You simply can’t afford to ignore or forget about the small and unexpected costs. Hopefully, with the information above, you can plan for your surprise expenses, protecting your company finances and business as a whole.
If you like what you’ve read here, please let others know of this post, blog, and site.
And thanks for reading! 🙂