Starting a small business can be an intimidating pursuit, even at the best of times. Alongside heavy time investments, there are many costs that can be unexpected for those new to the business world. Covering six ways you can avoid these costs, our goal is to help you find your way to a more controlled small business, to reduce stress and aid in long-term success.
Licenses and Permits
Licenses and permits are a big part of every business, but their costs can vary wildly by location and even specialization. For example, some states might require permits that others don’t, and keeping track of these can be difficult. To combat this problem, we’d encourage relying on business establishment guides designed to cater to your specific industry and area.
Just remember that licenses and permits can change rapidly, so you’ll want to avoid relying on information that isn’t constantly updated. A great way to mitigate issues like this is to get advice under business mentorship programs, many of which are partially government-funded or subsidized.
Insurance is one of those things we know we need, but we still tend to underestimate it. Fundamentally, this is owed to wishful thinking. While a positive attitude can be good to have, it needs to be known that, in business, a realistic outlook is infinitely more helpful.
As with licenses and permits, finding the right insurance package for you means carefully weighing your options and the available packages. With this in mind, there are some types of insurance such as general liability insurance, which should be embraced by all. As a baseline, general liability insurance can help you protect you against any damage that occurs during the running of your business, to anyone other than your employees. This can then be extended into related options such as professional liability, and commercial auto insurance.
Ongoing Equipment and Maintenance Costs
Equipment often seems like it might be the most predictable of costs, but in reality, these costs can be trickier than they appear. In real-world circumstances, you can’t draw a perfect parallel from how the equipment will perform in other businesses to how it performs in yours.
Different materials used, running times, and operating environment can all create confounding issues. Because of this, it can be a good idea to expect that equipment won’t last long, and will require constant maintenance. From here you budget for funds to combat the problem, and enough data to calculate more accurate long-term predictions of wear and tear.
Keeping on Top of Taxes
Taxes might also seem fairly straightforward to begin with. However, tax-rates can change, and under/overperforming can make significant differences to your tax burdens. In general, a professional accountant can address such issues, but even then, it can be best to overestimate your tax responsibilities to be safe. Remember, getting back overpaid tax is easy, but addressing underpaid tax is rarely an enjoyable experience.
Depending on your staff size, you might also need to pay special attention to the cost of your business’ utilities. It’s all good and well to assume that your business can operate at skeleton utility costs, but such idealism is rarely achievable in actual operation.
In simple terms, employees will tend to use more than employers expect to remain comfortable. Water and air conditioning bills can play an especially important role here. While you’ll always want to be sure to reduce waste, you also need to understand that, to keep employees happy and working at peak efficiency, some higher than desired utility costs might be unavoidable.
In business, shrinkage refers to the loss of inventory through damage, theft, or spoilage. In some instances, insurance can cover these losses, but in others, you as the owner might have to eat the cost. Knowing this, a successful business will expect and financially plan for some shrinkage, and track when it does occur. Understanding the exact numbers of average shrinkage doesn’t just let you prepare financially, it also allows you to address areas of concern, to reduce repeating avoidable accidents.
The above ideas won’t render your business completely immune to hidden costs, but they should help diminish the risk significantly. Remember that this battle is an ongoing one, where you need to be constantly vigilant as your business functions and evolves. Keep a diary, set reminders, and your chances of long-lasting success and avoiding hidden costs will be all the better for it.