Starting a business is rarely cheap, but some hidden costs can easily blindside even the most prepared future small-business owner.
Fortunately, with the right preparation and knowledge, you can spot and prepare for these expenses. Here are some of the biggest hidden costs you need to consider if you plan on starting a small business.
- 1. Permits, Licenses and Fees
No matter what kind of business you run, you’ll probably have to contend with permits and licensing in one way or another.
For example, most companies will need a general business license in addition to more specific permits, like those required to offer services as a lawyer or accountant. You may need one to put up signs for your business, depending on where you live. It also costs money to incorporate — and if you want to hire a lawyer to help ensure you’re meeting all rules and regulations, you can expect to spend there, too.
Research and budgeting will help you manage these costs. Business legal services can help you identify licenses and permits you may need to apply for. You will need to pay for these services upfront, but they can save you money and time — and are a great way to get ahead of unexpected licensing costs and other fees.
- 2. Your Web Presence
Many businesses start with a simple website but quickly find that — despite being online — they’re not receiving any traffic. If your company is especially dependent on online sales, and if e-commerce is a significant part of your business model, this can be especially detrimental.
While a strong web presence is essential to any small business today, just having a website up and running isn’t a guarantee you’ll receive and conversions. For your web presence to be effective, you should learn how to generate leads using your website and invest in online marketing, good web design and a strong social media presence.
This may mean working with a web designer, rather than creating a site yourself. While this may bump up the cost of your internet presence, it will also ensure your business is working with a strong presence from the beginning.
- 3. General Building Upkeep and Administrative Costs
Building upkeep and administrative costs will vary depending on what kind of business you run and the space you use. You can be certain, though, that if you have a dedicated space for your business, it will cost money to keep it stocked and comfortable.
This means keeping a kitchen full, buying office and cleaning supplies, outfitting your workspace with any necessary furniture and paying utility bills. You’ll also need to pay phone and internet bills to keep your office and employees connected.
Research, preparation and the right equipment can help you handle these costs. Knowing the ideal temperature to balance comfort against heat loss, for example, can help cut down on expenses in winter. More efficient HVAC systems can cut back on costs year-round.
- 4. Equipment and Maintenance
Every business is going to need equipment in one form or another. You probably already have the essentials in mind, but general office equipment — like laptops, copiers and scanners — can sometimes be overlooked. Small-business owners also sometimes forget to account for the maintenance needed to keep this equipment up and running.
Buying secondhand, refurbished tech is a great way to cut back on initial equipment costs. Government auctions and surplus sales can help you secure bulkier, harder-to-find used equipment.
A maintenance schedule can also help you avoid equipment failure and downtime, but you will need to commit some money upfront and budget for recurring maintenance checks.
- 5. Hiring and Turnover
Not every employee you hire will stick around. Even with the best possible work environment, some employees will eventually move on and find opportunities that are a better fit. Turnover can sometimes be avoided — but you should always budget in the costs of hiring new workers.
In general, hiring an employee is time-consuming and expensive. You’ll need to create job listings, sift through resumes and sit down for interviews with short-listed candidates. All this can cost money in the form of advertising and time spent.
Turnover will cost you in other ways, too. For example, it takes a while for new employees to get up to speed. Productivity typically doesn’t hit maximum levels until a year or two after someone has settled into a role.
Fortunately, planning for some level of turnover can help you manage its effects more easily. Good onboarding has been shown to reduce the time employees take to hit full productivity. Offering perks and creating a work culture that encourages employees to stay with your company can also help.
- Avoiding Some of the Most Common Hidden Business Costs
Many new small businesses can be swamped by hidden costs they didn’t see coming. Fortunately, with a bit of planning, you can manage many of these expenses. Business legal services can help you with permits and licensing. Web designers can help you build a strong internet presence for your brand. Extra planning can help you manage equipment costs and general office upkeep.
Planning for these costs will help you avoid some of the biggest hidden expenses that often blindside small businesses.
Lexie is a digital nomad and UI designer. If she’s not traveling to various parts of the country, you can find her at the local flea markets or hiking with her goldendoodle. Check out her design blog, Design Roast, and connect with her on Twitter @lexieludesigner.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.