Running a business is a huge responsibility and one that has the potential to change your entire life. As an entrepreneur, there are a lot of important tasks that you’ll have to deal with, but one of the most crucial is managing your money. Regardless of what anyone tells you, running a company is far from cheap, so every penny in your budget counts. With that in mind, life can be made incredibly tricky when a hidden and unexpected cost sneaks up on you. To make sure that you’re well prepared, here are four surprising costs that you need to budget for.
Employee Turnover
Most business owners remember to plan for the cost of hiring staff, but few consider how much money you lose when an employee decides to move on. You’ll have to go through the hiring process again, train the new hire, and pay for a temp until this is possible. You’ll also need to contest any claims your ex-employee brings up regarding holiday pay and other benefits. To prevent this, it’s important that you keep your team happy and create a stable workforce.
Inventory Shrinkage
For every company out there that handles products, shrinkage is always a risk. This is the loss or damage of these products, whether intentional or not before they are sold to customers. Unfortunately, there is no way to eliminate shrinkage completely, but there are things that you can do to reduce and prevent it. You should start by improving security in your company, especially near your stock. You should also improve inventory management and employee training.
Product Shipping
Businesses that ship their products, whether it be to the store, customers, or both, rarely consider how much this can cost. At best, you’ll need to pay for postage and packing, which can still cost you a small fortune, but, at worst, you’ll need commercial body builders to build you a truck body suited to transport your goods. Shopping around or moving closer to your warehouse or customers can help to lower this expense, but it won’t get rid of it.
Administrative Expenses
Administrative expenses are all of the costs required to run your business, even when selling activity is low or non-existent. Unless you run a home-based business, this will include any rent or mortgage payments you need to make. You’ll also need to budget for utilities, like gas and electric, office supplies, food for employees, and more. Legal fees, insurance, and professional services, like electricians, will also need to be taken into consideration.
In the world of business, money is the fuel that keeps a company up and running. Without it, it’s impossible to get anything done, which is why it’s so important that you keep track of yours. Just one unexpected expense, no matter how small, could turn your budget on it’s head and cause your entire company to collapse. Knowing the costs to expect can better prepare you, but you should also work towards building an emergency fund. This way, if and when you’re faced with a cost you didn’t plan for, you won’t have to put your company into debt to pay it.