Running a business is rife with opportunity and advantages, but there are a number of hidden business costs you would benefit from being aware of. On the way to prosperity and success, it’s important that these unexpected expenses don’t trip you up, as they can be damaging if they start to build up – especially when you’re just starting out.
If you don’t have the financial resources to keep the business running, then things could end up going south. In business, it’s important to expect the unexpected. Prepare for any sudden shocks and hidden overheads by getting know some of the commonly overlooked business costs.
Any permits and licenses that you need to do business in your community aren’t just a one-time payment. You’ll have to renew them periodically, so make sure that you set aside some money for these continued expenses and make a note of when they need to be renewed.
Likewise, if you’re part of any networking organisations such as your local Chambers of Commerce, then you may have to renew your membership on a regular basis. Though these groups are great for keeping you in the industry loop and give you plenty of exposure, it’s worth being selective about which you join because their annual memberships can start to stack up. You can find out more about support networks for small businesses here.
Look for memberships that can provide business-related discounts on items like insurance, loans, credit card fees, supplies and training.
When your business begins to grow, so too does the need to protect yourself from financial and legal troubles. Employer liability and public liability cover are good places to start, as these protect you from losses if someone sues you.
It’s worth negotiating with your insurance providers to find the best deal. A sound track record will serve you well here; they’ll want to keep your business, and could reward you with discounts as a result. Make sure you’re reviewing your cover to see if it still meets the needs of your business. If something needs to change, talk to your provider and other insurers to seek out the best rates.
Click here for more help and advice on how to choose the right insurance for your business.
A common occurrence that can cost businesses dearly; avoiding inventory losses is something no one plans on doing, but it can pay dividends in the long term. Things like delayed shipments from vendors, picking errors that lead to incorrect orders, damaged goods and theft can all take their toll on your inventory. Ensure your business can prevent such things by using an inventory management system that uses barcodes and scanners; the real-time data it provides can help to reduce the risk of shrinkage.
Running every aspect of a business isn’t impossible, but it can be challenging, especially if you lack expertise in certain areas. Turning to professional specialists such as solicitors, accountants and financial advisors can all provide essential insights and advice. They can help you keep your business afloat, but they’ll also run up some serious bills too.
Don’t be afraid to negotiate with these professionals for more manageable rates. Additionally, see if any smaller business tasks can be handled by their support staff or even freelancers.
Simply put, you need payments to cover your bottom line. So, when expected payments are delayed – in the form of forgetful customers or withheld bank transactions, for example – they can seriously slow down your cash flow. This, in turn, can lead to overdraft or late fees and may even hurt your credit rating.
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Perhaps your most valuable resource, ensuring that your time isn’t wasted is vital. Whether you’re starting out or not, cast an eye on the time and energy you’re spending on things that could be outsourced, delegated or automated. Likewise, if you’re spending too much time on tasks that don’t generate revenue, then you’re setting yourself up for a fall.
Are you spending too much time on your work, and not enough time focusing on your personal relationships and wellbeing? Make sure the business isn’t taking over everything in your life. Read our business manager’s guide to a healthy work/life balance for some great tips on how to maintain the boundaries between office and home.
If you’re manufacturing a product, then the investment required will need to cover the cost of design, engineering and manufacturing, all of which can be very expensive. However, this is not an area you should be cutting corners on; obviously, you want your product to be the best in its market.
If your business predominantly works online or in the eCommerce industry, then you’ll be spending money on things like content creation, maintaining your website, networking or conducting cybersecurity.
With the number of cash-only businesses falling each year, the onus is on businesses to increase their acceptance of credit cards. And though credit cards let customers make bigger purchases more frequently and conveniently, you’ll have to deal with interchange fees. These are typically a per-transaction flat fee of around 3%, which may seem like a small amount, but they can start to weaken your account if you aren’t giving them the proper consideration.
Businesses that use credit to finance expenses or provide cash flow should also be careful. If you can’t pay your full balance each month, you can easily accumulate unmanageable debt due to late payments, high-interest rates and continued reliance on these accounts.
When you’re starting out, think about the space you actually require now, and what you’ll need once your business begins to grow. Perhaps temporary office space will suffice for the time being. Companies such as Regus, Liquid Space and Share Desk offer temporary space which is particularly useful for businesses unsure of where they’ll be down the line. Plus, they also include office equipment, internet access, and receptionist services, all of which come at an additional cost if you decide to open private premises.
Additionally, utility costs will also chip away at your finances. Luckily, these leased spaces often include them as part of the agreement. If you don’t go down the temporary route, however, you should look for utility providers that offer things such as flex-pay, competitive rates or budget billing. Likewise, energy audit programs can help with your business’ energy efficiency, further helping to offset your costs.
Take a look at our guide on the things to consider when choosing commercial premises for more useful tips on getting your workspace right.
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