As a small business owner you know you have big responsibilities. While serving your customer base is most important, it's essential to keep a solid grasp on your company's financial situation.
There are many costs of running your own business. Some of these are easy to see, including but not limited to:
Conversely, there are also hidden costs of running a business. If you neglect to identify these, it could work against you in the long run.
Here are five hidden costs of running your own business, as well as advice on how to deal with each one:
1. Office Supplies
This shouldn't be a hidden cost, but often fits into this category because you overlook just how much money you are spending.
A hundred dollars here for printer paper. A few hundred dollars there for toner and ink. Soon enough, you've spent $1,000 or more and you don't even realize it.
Office supplies are a necessary expense, which is all the more reason to plan for them accordingly. You must know exactly how much you are spending, as this can help you plan for future purchases.
It doesn't matter if you rent or own your office space, this could slowly bite into your profits.
How much are you spending for internet service? How about electricity and gas? Just the same as your home, office utilities can quickly add up.
Before you rent office space or purchase property, think long and hard about the cost of utilities. You may find that you are taking on too much space, which means that your utility bills will be higher than necessary.
You don't want to spend money on insurance coverage, but you know it's something you have to do.
If you pay your premiums on an annual basis, it's easy for this cost to hide for the better part of the year.
The best thing you can do is make a list of each type of insurance you carry. This can include but is not limited to workers' comp, employer liability coverage, renter's insurance, auto insurance, and key employee insurance.
From there, make note of when each premium payment is due. If you're tired of this expense slipping through the cracks, you may want to opt for monthly billing. A monthly payment may be more of a hassle, but it could help you better manage this expense.
But here's the issue: credit card fees can quickly add up, sometimes without you realizing it.
The easiest way to avoid this is to discontinue the use of a credit card. However, this may not be possible for your type of business. The alternative is to closely review each statement, ensuring that your understand what you are paying in terms of fees and interest.
You may find yourself hiring outside help every now and again. Since this isn't a "regular thing," it fits into the hidden cost category.
Do you often hire an attorney before signing a contract? Have you ever got into a difficult tax situation and needed to bring in an accountant? What about some kind of tech emergency? You can't have your phones or computers go down for any extended period of time.
Professional service fees can really add up, especially if you don't have a regular plan in place.
There's nothing better than running your own business. If you want to improve your bottom line and feel better about the future, grab hold of the five hidden costs detailed above.