Not everyone is made for the 9 to 5 life today. People seeking self-reliance are everywhere and entrepreneurship seems promising for a life that doesn’t include having a boss. Starting up your own business as a source of income is what many of us seek, but things can go sideways for some of us. The reasons for business failure can vary and could range from someone being treacherous or employees not liking your management style to our failure to evaluate more carefully the hidden costs of running a business. More often than not, underestimating the costs of running a business and failing to plan for the expenses you need to incur so it can run smoothly can be devastating. In fact, sometimes, in the attempt to put a business on the right track and make it run effectively, your capital input could evaporate within the first few years of initiation. This is the result of a lack of experience for many young entrepreneurs.
When starting a business, the main focus of any entrepreneur is the work that they will be conducting at their business facility. For the financial management of the business, the easiest option would be to outsource your accounting to a trusted and reliable business services provider like ATS Accounting & Tax Edmonton. If you are not experienced at managing start-ups, there are some aspects of running a business for which the expenses go unnoticed and the business ends up having more expenditure than profit. The hidden costs of running a business can affect its growth and profitability therefore you must not ignore nor underestimate them.
Licenses and Permits
The days of barter are gone, and everything you earn has to be shared with the government in the form of taxes. So eventually, the government needs to be informed before you set foot in the market. Every new business needs permits from the government and the local business community. Licenses for the sale of products or services 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 updates about important events. You can also hire a business service, like ATS Accounting & Tax Edmonton, for consultation on starting a business to avoid any costly pitfalls.
Facility and Utilities
Running a business comes along with the requirement for the proper space to formalize your ideas. 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 staff and office equipment, like computers, can affect your bottom line while going unnoticed. Before you rent office space, ask yourself what kind of facility is required for the nature of your business and see if temporary office space can satisfy your needs. Hiring a bookkeeping service 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 to function effectively. When first starting a business, most entrepreneurs are focused on the development of their products or services and 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, tend to be neglected. Sometimes, even the opportune equipment up-gradation in your workspace can save you future financial troubles and costs for 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 technology in the market since they can influence your efficiency.
Employees and Payrolls
Taking care of the people that help turn the wheels of your business and do their best to keep it rolling along 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 can add up. For the proper management of employee compensation, 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 employees. 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 or allowing casual dressing and flexible working hours.
Inventory Loss
Inventory loss or shrinkage is the loss of goods of sale to things like theft, damage, burglaries, or faulty products. Shrinkage costs up to CA$ 4 billion every year to Canadian retailers. Shrinkage costs add up over time and can be significant. 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 a fire. What’s more, give allowances to employees to shop at the workplace at discounted rates will induce a sense of ownership and prevent internal thefts in your facility.
Time
Running a successful business requires money but most importantly, it can demand a great deal 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 offering professional business services. As a result, 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 costs of running a business and the risks involved in the earlier stages can lead to the business failing miserably. If you’re someone setting off on a new venture, hire a start-up consultant from a company providing business services like ATS Accounting & Tax Edmonton. Our primary goal as trusted advisors is to be available to provide insightful advice to enable our clients to make informed financial decisions. We do not accept anything less from ourselves and this is what we deliver to you. Call us at 780-484-4006 or contact us online to book your FREE 15-Minute Consultation!
