Starting something new generally isn’t easy… especially when it comes to being your own boss for the first time. Before beginning a small business, understanding the hidden expenses can be the difference between your business’ ability to survive or to sink.
According to a
report by Forbes, 7 out of 10 new employer firms survive at least 2 years, half at least 5 years, a third last at least 10 years and a quarter stay in business 15 years or more. So what does it take to become a part of the quarter that survives 15 years or more?
Two words:
understanding expenses.
If you’ve already committed yourself to being an entrepreneur, you’ve probably read, heard, and seen countless tips regarding what to do and what
not to do when it comes to
starting a small business. However, comprehending common expenses (more commonly known as the first concept you need to understand in starting your business) will be the most valuable building block for your success.
While the odds of your business surviving for a few years aren’t too bad, a report by the Global Entrepreneurship Monitor revealed more than half of all businesses shut down their doors due to a lack of profitability. Essentially, you might think everything is running smoothly until hidden expenses creep into your profits and you become swamped. In order for you to understand those expenses before it’s too late, we’ve created a list of the top 5 hidden expenses of a small business:
1. Licensing Fees
First and foremost, it’s important to understand
what license or permit you need to start a business. Expenses in licensing fees can come from every angle imaginable (and unimaginable). There are federal and local regulations to consider, as well as deciding a physical location and business jurisdiction. Don’t forget the amount of permits and how often they will need to be renewed. Something else to consider in the midst of the licensing processes are
surety bonds. It’s easy for new business owners to overlook a surety bond, but it’s important to beware of this expense because you could find your small business needing to pay a premium ranging from
£65 to £13000 or more. If you’re especially searching for help with surety bonds,
Zurich encourages businesses with a turnover of £5m or less to chose an insurance broker.
2. Credit Card Fees
Surely this expense doesn’t come as a surprise. When you get your business off the ground and running, you’re expecting consumers to purchase your product. However, if you allow your customers to use a credit card to pay for your product, don’t be shaken when you see around 3% charges in credit card fees. Before you consider inconveniencing your customers and cutting their ability to use credit cards on your product, Business News Daily has provided tricks to
lowering credit card processing fees.
3. Utilities
Utilities might be one of the first items on your list to check off when it comes to setting up your small business. The amount of utilities you use and how you budget your utilities can surely sneak up on you. You’re most likely to have an electric, water, gas, trash and Internet fee if your business is in a physical building. Small Business Pro allows you to
compare and choose the best business utilities costs and prices to reduce bills specifically for UK businesses. In addition, Wasp has provided ways for you to understanding how
conducting an energy audit can benefit your small business and helps you find ways to make cost-reducing improvements.
4. Employees
Employees are essential to starting your business, but their expenses can easily rack up to an unmanageable level. It’s important to note salaries, sick leave, vacation and health insurance costs when creating your budget. While health insurance is certainly one of the most important employee expenses, choosing the insurance that best suits your organization is imperative. Drewberry Insurance allows you to
compare the Top 10 UK Insurers so you can feel confident and wise regarding the safety and cost of health insurance.
5. Your Time
Last but certainty not least, your time is a hidden expense that should not be ignored. OK, your expenditure of yourself doesn’t exactly show up on an income statement the way normal expenses do, but the amount of time you put into your work that doesn’t earn you income can represent lost revenue. Being the boss is an easy excuse for wanting to be involved in every aspect of the organization; however, the most efficient way for you to grow your small business is not wasting your time doing other peoples’ jobs. Consider these 3 ways to cut your time:
By using the systems and procedures listed above, you’re not only doing yourself a favor by saving valuable time, you’re doing your employees a favor by providing them with cost efficient, easy to use and trustworthy products that will increase the growth of your small business.
You jumped in the water with both feet the moment you decided to start your own small business. Your goal is to
swim; hidden expenses are trying to make you
sink. It’s now up to you to use your knowledge of the 5 most important hidden expenses of a small business when planning and budgeting for your debut.
Starting something new generally isn’t easy… especially when it comes to being your own boss for the first time. Before beginning a small business, understanding the hidden expenses can be the difference between your business’ ability to survive or to sink.
According to a 