Running a small business isn’t easy, especially when it comes to your finances.
However, many entrepreneurs don’t realize just how difficult it can be to keep a small business afloat financially because they’re not aware of the significant hidden costs of running a startup business.
If you want to start a business with your eyes open, then identify those potentially hidden costs before they pop up.
Permits and Licenses
Depending on which sector your business operates in and where your company is based, you may need one or more permits and licenses to operate legally. These can often be quite expensive, which means you should factor them into your business plan and budget.
New business owners often overlook that they’ll need to rent a business space but also maintain it and all the equipment located within. From keeping the place clean to buying elevator replacement parts and hiring someone to fit them, there are a lot of costs associated with running a workplace and keeping it in a good state of repair. If you neglect to factor them into your financial planning, then you could end up in a bad situation with your money and and unsafe workplace.
You need to heat and light your office, and depending on how big the space is, that could mean spending thousands of dollars annually. Business utilities are much more expensive than your home utility bills, so do your research, plan for expenses, and reduce costs where you can. This could mean going green where possible, buying low-energy bulbs and machinery, and encouraging employees to switch things off when they’re not using them.
Depending on where you’re located and other factors, you may get away with just paying minimum wage. But if you require skilled workers or want to attract the top talent in your industry, then you must pay a good wage and offer benefits and incentives to attract the right people. This can get expensive pretty fast, but the better class of employees you can hire, the more productive and creative they’re likely to be.
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