From buying or renting your property to stocking up on inventory, you know how expensive it is to start a small business. Or, at least you think you do. So, you drain your savings, get your bank loan or otherwise secure your financing and start to set up shop.
Then it all hits at once: The expenses you never prepared for.
There are so many hidden costs that are a part of starting or operating a small business. Not being fully prepared of all of these expenses can quickly land you in hot water, scrambling to figure out how to pay for them. Even if you prepare for these “other” expenses at the beginning, making sure you’re saving enough of your revenue to cover ongoing experiences you may not have planned for at the beginning is imperative.
Depending on what kind of company you own, these costs of starting a small business may vary. But, they are all applicable in some way or another:
So, you’ve figured out what kind of business you want to open, you have your name, and you’re ready to go. What’s next? Well, you have to register your business, likely as an LLC at the beginning. That costs money. In some states, it’s pretty cheap. But in other states, this registration could be more costly. Down the road, you may also find yourself in a position to incorporate or otherwise change your business structure — again, that costs money.
Of course, you may not know exactly how to make sure your business is legally compliant. So, you may choose to hire an attorney. You may also want to keep a lawyer on retainer just in case there’s a lawsuit brought against your company. And if such a lawsuit is brought, you’ll need to keep in mind any kind of settlement you have to pay out.
You probably included a computer or cash register in your startup costs — as you should have. But what happens when you expand? You’ll need to buy more equipment to make sure you can keep up with demand. You’ll also need to make sure those computers and registers are connected and online, and internet isn’t always cheap. While these are more obvious expenses, there are smaller ones that add up.
Do you have a coffee maker in the break room? You’ll need to keep it stocked. You also have to keep in mind shipping costs if you deliver products. Don’t forget general maintenance and upkeep for your store, and other expenses like credit card fees. All these small costs of starting a small business can become overwhelming if you aren’t prepared.
Depending on how many full-time employees you have on staff, you may be required to offer health insurance. Even if it’s not required, offering good insurance is always a perk employees are looking for. This can be quite expensive, even if you offer insurance that isn’t exactly great. Though health insurance may not be required, you will need to have disability insurance and other policies.
Beyond employee benefits, you’ll need property insurance, liability insurance, fleet insurance… and the list goes on. Though these coverages may be required, there are ways to save money on them. Be sure to read through all the fine print carefully, and don’t be afraid to negotiate or shop for a new insurance provider. Some insurers offer discounts when you have multiple policies with them.
Speaking of Staff…
You know you need to pay your employees a salary or hourly wages. But there is so much more to staffing costs than that. Again, depending on the size of your business, you may be required to offer family and medical leave. You also have to take into consideration payroll taxes, recruitment, training, additional benefits, office space and more.
A good way to budget for these costs is to reserve about a fifth of all basic salary costs for other staffing expenses. You can also save money by making sure you are hiring smart so you don’t have to continually train new employees. Plus, finding the right employees from the start can help keep your business productive, thus keeping revenue higher.
Your utility costs could vary wildly, depending on the type of business you own and where it’s located. Cooling and heating are, predictably, the biggest chunks of your utility costs. General electricity use is also a considerable cost. While a small office may not have a very high electric bill, a restaurant may have much higher costs due to refrigeration, ovens and other factors. If you have a fleet, maintenance and gas could also fit into this category.
While you can’t really avoid utility costs, you can potentially reduce them. Be sure to use the most energy efficient options, like Energy Star appliances and LED light bulbs. Ensure employees are turning off lights and computers when they aren’t in use. These kinds of changes may seem insignificant in the short run, but over time, it could help you save hundreds, if not thousands, of dollars every year.
Let Us Help You Save Money
At Company.com, we can’t eliminate every expense your business will encounter. But, we can help you save money. Our services, like our hiring software, can help you streamline your human resources process and keep your company productive. Moreover, we can help you get the small business funding you need, whether you’re just starting out, are expanding or just need more inventory. We can even help you find the right insurance for your business.
To learn more about how Company.com can help your business thrive and help you manage the costs of starting a small business, or to start a free trial of our premium software package, contact us today.