If you have recently looked into starting your own business, you may have already calculated the cost of start-up. From product manufacturing to wages and marketing. There is a lot to think about. However, did you know that there are many hidden expenses as well? Below, we are going to take a look at ten of them so that you can prepare yourself and greater your chances of success.
Want to learn more? Then keep on reading!
- Licenses and Permits
Depending on what business you are operating, you will most likely need some type of license and permit. It would help if you remembered that a lot of these require yearly renewal and can be pretty costly. Alongside this, if you forget, you may face severe fines. Here are some things you may need:
- State licenses
- Business license
- Sales tax license
- Health department permit
- Liquor license
- Resellers license
Want to make sure you don’t miss anything? Check out this start-up checklist.
- Office Space, Supplies, and Utilities
While you may be able to reduce your start-up costs at first by working from your own home, there will come a time when you need to expand. Paying for office space, supplies, and your utilities every month will be one of your most significant expenses and something that you need to budget for. It’s very easy to get into debt in this area unless you plan for it and avoid overspending.
As much as we take care of something, over time, it is going to need fixing or replacing. These maintenance fees must be thought about, especially because they can be quite costly depending on the severity of the issue. By the time you pay for the extra part and the labor wages, you could be down a few thousand dollars.
We aren’t just talking about equipment maintenance either. You may need to hire a commercial electrician, a plumber, or even a painter. All of these are expenses that you need to prepare for.
- Computer Upgrades
Technology has been an incredible asset for businesses, making operating much easier. However, it changes every day, and in order to keep up with the current times, you’re going to need to upgrade regularly. This means new systems, computers, and devices, as well as increased internet and software fees. It may seem never-ending, but if you budget for it in the beginning, it won’t seem like such an astronomical expense.
A trademark ensures that your products, brand, and name cannot be stolen by another business. There are different types of trademarks, including ones for scents, shapes, colors, and sounds. However, no matter what you design and sell, they are essential. Each type varies in price, so make sure you look into them in advance so that you can factor them into your budget.
Shrinkage is this term used to describe a loss of inventory. While you may want to avoid it, it’s going to happen at one time or another. This could be from a natural disaster, theft, vendor fraud, administrative or cashier error. We are only human, after all! This loss will affect your profit, which is why it’s wise to have an emergency fund set up, just in case you have to pay for any of these other hidden expenses. Trust us when we say it really is a lifesaver.
- Employee Benefits
You should already be able to calculate wages for your employees, but one thing you mustn’t forget is your employee benefits. Without offering enough compensation, your business can get a bad reputation. So alongside offering the standard vacation and sick days, consider what else you are going to provide and how much it will be. It could range from medical and life insurance to retirement plans and even extra days off.
- Research Expenses
Before you begin your new business journey, the first thing you usually do is research. However, even if you have grown, it’s still an essential part of running a company. The gathered information will assist with product development and improve your team.
Hiring a market research firm can be highly beneficial, but the cost will add up. Alongside this, you may need to hire a professional human resources team to find reliable and determined staff.
Insurance is one of the most vital things a business should have, and there are many different types of it. Before you know it, they can be a significant yearly expense, so research what you need and search around for the best deal. Here a few to get you started:
- Commercial Vehicle – Similar to regular car insurance but covers a work-related vehicle/fleet.
- Public/Product Liability – Covers you and your employees for any liabilities that occur from your product/service. For example, a person that has fallen and injured themselves on a wet floor.
- Cyber Liability – Protects your business in the case of a cyber-attack where sensitive and personal data is stolen.
- Workers Compensation – Covers medical treatment, death, and disability benefits if an employee is injured or dies as a result of working within your business.
It’s impossible to take on everything yourself, and outsourcing services can be a great way to save time and grow your business in other areas. That being said, it is an extra expense that you need to watch out for. If you can’t afford it, it’s better to leave it until you can. Some common examples of services you may decide to outsource are IT, bookkeeping, human resources, cleaning, marketing, and customer service.
And that’s it! These were ten different hidden expenses that your business should prepare for. By planning well from the beginning, you can avoid falling into debt and can continue working towards success. If you are struggling to wrap your head around everything, consider hiring a financial advisor to point you in the right direction.
What do you think? Are there any other hidden costs that you have had to face when starting your business?