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No matter what type of business you run, it is critical to get your finances right. This may sound easy enough, but people often find that it is a bigger challenge than they expected once they have had their company up and running for a while. This is because there are so many different expenses to account for, forecasts to draw up, and unexpected hurdles along the way. With that in mind, in this blog post, we are going to take a look at all of the expenses your business needs to account for, including the costs that are most often overlooked.

Opportunity – When it comes to business costs, we tend to associate them with something negative, especially when they are not expected. However, this is most certainly not the case. In fact, some of the biggest costs come from opportunities. Yes, opportunities are typically designed to make you a greater amount of profit in the long run. Nonetheless, this is going to cost you money to begin with. Therefore, taking advantage of opportunities is one of the most unexpected business costs you will need to account for, and it is one of the most difficult. After all, you never know when an opportunity is going to come your way. The best thing to do is get to grips with cash flow management so that you always have money available should a good opportunity come your way.

Credit card fees – Most business owners will rely on finance of some form. Of course, if you go over your credit limit or you don’t pay your bills on time, you are going to be subject to more fees. However, this is not the type of credit card fees we are referring to. What we are referring to is the fees you will be charged if a customer pays for a service or product you are offering with a credit card. In most cases, you will pay around three per cent of the total charges in vendor fees. It is important to account for this when determining your expenses. You may think that the obvious solution is to simply take away the option of paying with credit card. But if you do this, you are only going to lose more customers. After all, people like to have various payment options, and paying with a credit card is expected today.

Professional services – Nowadays, handling everything in-house is virtually impossible. Business owners have so many different tasks to contend with, and so outsourcing is a necessity. Most people will outsource accounting and legal services at the very minimum. This will cost you a considerable amount of money, but specialists can also save you time and money too, so it is important to keep this in mind. After all, accounting experts will be able to find grants to help you fund your endeavours, maintain accurate inventory and payment records, and translate tax codes. Legal professionals can help you untangle red tape and ensure that everything is handled above board. The importance of these services cannot be overlooked, but do make sure you account for the cost of them.

Time – You know what they say, time is money, and this is definitely an accurate saying. You cannot afford to waste time. It is your most valuable resource. If you are spending too much time on a business task that could be delegated to another employee, then you are not using your time efficiently, and this is going to cost your business money. A lot of people often assume that the key to making more money and achieving more is working more hours. But that is not the case. They key is to work smarter, i.e. achieve more in the hours you have available to you.

Payment delays – The importance of effective cash flow management cannot be overlooked. This involves ensuring all invoices are paid in a timely manner. Needless to say, this is often easier said than done. It can be very difficult to get all customers to pay you as soon as you require it. Nonetheless, there are some things you can do to increase the chances of this. This includes sending out your invoices as soon as the work is complete, as well as following up if a payment is delayed. You also need to ensure terms and conditions are sent to all clients prior to any invoices being given, making it clear when you expect to be paid and in what manner.

Equipment hire – It is likely that you are going to need a variety of equipment to get your business up and running. You have probably already accounted for this. However, what a lot of business owners do not account for is the equipment they are going to need throughout their lifecycle, especially equipment that is going to be hired. Companies like Eastern Plant Hire can give you a quotation regarding various pieces of equipment, from truck to plant hire, so that you can get a better understanding of how much money you may need to attribute to this.

Shrinkage – This is a term that is used to describe inventory loss at some point between you purchasing it from your supplier and your customer placing a purchase. You may think that this does not happen very often, or that it does not cost businesses a lot of money. However, you would be surprised – roughly 1.4 per cent of a company’s total sales are lost due to shrinkage. There are numerous reasons for this to happen, including theft, damaged goods, picking errors, and short shipments from vendors.

Insurance – Another business expense you need to take into account is insurance. Your insurance premiums are some of the most important costs your business will deal with on a monthly basis. At a very minimum, you are going to need to carry public liability coverage and employer liability coverage. It is also a wise idea to carry insurance for injuries and illnesses, property, and negligence. You can save money by assessing your needs and only getting coverage for the elements you require. You will also typically be eligible for a discount if you pay for the insurance per year rather than on a monthly basis.

Employees and benefits – The potential of your business is significantly impacted by the people that help you to run it. When putting your budget together, you will need to account for training costs, health insurance (if you provide it), medical leave, personal leave, salaries, and any other employee benefits you provide. Of course, an obvious solution would be to reduce employee benefits, however, this could have a very negative impact. If you do not invest in your employees properly, why would they be willing to invest in you? It’s likely that your employee retention rates will be very low, as they will look for another company that treats them better.

Office space and utilities – The space you have available to you will have a significant impact on your expenses. Needless to say, you are going to need a dedicated office space. But, are you using more space than is required? In fact, do you even need a dedicated office space at all? A lot of businesses today are run from the comfort of people’s homes. Before you start renting somewhere, think about your business, both now and in the future. This should help you to plot your route regarding obtaining the office space required both now and when your business begins to grow.

Licenses and permits ­– Last but not least, we have licenses and permits. After all, when it comes to business, it usually tends to start with paper. Unfortunately, this is rarely a one-off expense, either. So, when planning how much of an impact this is going to have on your finances, you need to discover how often all of your permits and licenses need to be renewed, and how much this is going to set you back. It is also wise to make sure you have some cash available for membership dues with networking organisations, for example, groups dedicated to your industry and your local chamber of commerce.

As you can see, there are many different expenses that your business is going to need to take into consideration. It is vital to account for all of the costs that have been touched upon, otherwise your financial records will not be in order, and this can be a big problem for your business as time passes. This is especially the case if you underestimate costs and assume you have more money than you actually do.