It is 2019, and not everyone is made for the 9 to 5 life today. People seeking to do their minds are everywhere and entrepreneurship seems promising for a life that doesn’t need a boss. Starting up your own business as a source of income is what many of us seek, but things go sideways for some. Reasons could be someone being treacherous or employees not liking the form of your work. A lot of times, the reason is just incomplete for the expenses you make for the business to run smoothly. Sometimes, in putting a business on the tracks and making it run, the capital input of the company dries in the first few years of initiation. This is the result of lack of experience for many young entrepreneurs.
When starting a business, the basic flow of thought of any beginner is towards the work that they will be doing in their business facility. For the financial management of the business, the easiest option would be to outsource your accounting through business services. But, there are some aspects of running a business in which the expenses go unnoticed and the business ends up having more expenditure than its profit. The hidden costs of running a business can mess with the growth of your businesses, therefore they must be on something you can’t turn a blind eye from.
Licenses and Permits
The days of barter are gone, and everything you earn has a share for the government as taxes. So eventually, the government needs to be informed before you set your foot in the market. One of the hidden costs of running a business is that every new business needs permits from the government and the local business community. Licenses for the sale of objects and functioning hours are required for you to legally be on the track. Licensing and permits are seldom one time fees and require renewals as per the nature of your business. Always set aside some money for the renewals. You can join the local business networking organizations for benefits in the market and update of events and dates. Or you can hire a business service for consultation on starting a business.
Facility and Utilities
Running a business comes along with the requirement for a space to formalize your ideas into working for your profit. A start-up with just the founders or partners might not need anything more than a home office if it’s an online business. But as the nature of the business changes, having a professional space for working away from daily life becomes an obligation. Also, the utilities of such a facility that houses your work staff and other electronic gadgets, like computers, can run heavy on your pockets while they go unnoticed. The facility to house your business could also be considered another of the hidden costs of running a business so before you rent an office space, ask yourself what kind of facility is required for the nature of your business and see if a temporary office space works? Hiring a bookkeeper from business services for the proper calculation of your expenses can save you time and money.
Maintenance of Equipment and Upgrades
Even a small retail shop on the street corner requires equipment for functioning. At the beginning of a business, most entrepreneurs are into the development of their product or services and focus on the apparatus involved in the production and sale. In the enthusiasm of production and management of supplies, the smaller factors of the business, like the office equipment (computers, fax machines, copiers, etc.) and maintenance of the facility, are neglected. Sometimes, even the opportune equipment up-gradation in your workspace can save you future financial troubles on their maintenance. You can buy second-hand products and office equipment like desks and chairs on websites like eBay. However, you should never neglect the computers and laptops in your office and keep upgrading them according to the changing tech in the market.
Employees and Payrolls
Taking care of the people that create the wheels of your business and do their best to keep it rolling must be the most important point of focus. Proper budgeting of the employees who work under you is necessary to keep the running costs under control. The salaries, leaves, health insurance and training costs add up to external expenses. For the proper management of the compensation your employees get, you can hire a business service for payroll management. If you fail to provide the proper work environment, satisfactory salaries or wages and added benefits, you will most likely lose some good workers. Replacing an employee costs a part of the previous worker’s salary and might even require giving away more compensation to the replacement. Provide perks in your office space like refreshments for zoned out staff or allowing casual dressing with flexible timings.
Inventory Loss
Another of the hidden costs of running a business is inventory loss or shrinkage. This is the loss of goods of sale to things like theft, damage, burglaries or faulty products. Shrinkage costs losses up to CA$ 4 billion every year to an average of Canadian retailers. Shrinkage costs add up over time and come up as a heavy loss on your hand. Inventory loss can be caused by both customer and employee theft. Prevention of shoplifting by employing security measures can decrease the amount of shrinkage. Insuring your warehouses from accidental damage will help you cope with the loss if the goods were lost to an accident like fire. Give allowances to employees to shop at the workplace for leaner rates. It will induce a sense of ownership and prevent internal thefts in your facility.
Time
Running a successful business requires money and most of all, it eats up all of your time. Time is the most important resource for all of us. Tasks that are time-consuming and non-productive at the same time, are going to be an opportunity-killer for you. Tasks like bookkeeping can be outsourced to hired specialists from companies with business services. While the work is on someone else’s timeline, you can use the time to find opportunities for expansion or maintain a work-life balance to keep your happy juices flowing.
Starting a business is not a mammoth task but ensuring its success is. Not having complete information about the obligatory procedures and the risks involved in the earlier stages can lead to the business failing miserably in the market.
If you’re someone setting off on a journey of business and entrepreneurship, contact our team of accountants at ATS Accounting & Tax Edmonton for more information about the hidden costs of running a business by booking your free 15-minute consultation. You can do that by calling us at 780-484-4006 or contacting us online.
