5 Business Expenses Small Business Owners Typically Underestimate
Many people start their dream of entrepreneurship with such positivity and high spirits, but underestimated expenses can quickly change this. This blog will help minimize some unpleasant surprises that may try to test your positivity and high spirit! I’ve compiled a small list of 5 business expenses that small business owners typically overlook, keep reading to find out what.
1. Renewable Permits, Licenses & Taxes
These are recurring expenses in the form of permits and licenses that are an essential part of your business – make sure you identify what exactly your specific business needs are and ensure you set aside enough money for them. It’s also important to keep in mind the various taxes and insurance involved with starting and running a business, it is quite commons to underestimate these costs as well as to not reevaluate them as the business grows.
2. Marketing Costs
One of the most underestimated costs new businesses experience. You have an amazing product but now you need the customer to come to you and purchase it! Many small businesses underestimate how much it can cost to get customers to buy from you. Make sure you budget well for this as in today’s day and age marketing is one of the critical wheels that must turn for your business to function and grow.
3. Equipment & Maintenance Fees
It is easy to be convinced that you need the best of the best equipment to get started, but sometimes it’s better to save your capital in the beginning and opt for a lower end model without the bells and whistles until you can afford to upgrade and reinvest once your cash flow has increased. Small businesses often believe they need to buy expensive machinery to compete at the level of higher-end businesses but this isn’t always the case, make sure you’re focusing on the total product or service you offer. Bigger machines often come with bigger bills for maintenance and repairs that you may not be prepared to take on just yet.
4. Employment Costs
The cost of hiring full-time employees is expensive. Unfortunately, many entrepreneurs only look at the salary component of this cost and fail to consider training, retaining bonuses, and benefits.
The people that help your business run significantly impact its potential. Salaries, personal and medical leave, health insurance, and training costs factor into the budget. Failing to invest properly in your employees, providing a living wage, a clean environment, office perks, and other benefits can lead to high employee turnover. Furthermore, it costs about one-fifth of a worker’s salary to replace that person when they leave. In some industries that cost is even higher.
5. Credit Card Fees
As consumers we’re all wary of credit cards and the costs associated with them, they should be used sparingly and wisely and all bills should be paid on time. However, many businesses underestimate how credit cards affect their business. If your business accepts credit cards it is important to ensure you are aware of exactly how much you need to pay as vendor charges. It’s usually around 3% but varies among different companies. Additionally, if you carry a balance from month to month, don’t forget to factor in the cost of interest.
There are lot more costs that can be overlooked but for now, we hope these 5 tips will help you avoid some surprises and unnecessary costs down the road.