Everybody who even looks into setting up a new business soon realises just how expensive it can be. For many people, this is all that is needed to turn them off the idea until some point later on down the line. Those that aren’t deterred and stump up the cash will eventually realise that…it doesn’t get much cheaper. Of course, the first massive outlay goes a long way to making sure a business is setup to succeed, but beyond that there are still quite a lot of expenses that can be difficult to forecast. In this article, we take a look at some of less talked about but very real costs that can slice into your profit margins.
Repairs, Replacements, and Upgrades
If you have taken the plunge and outfitted an office, say, with all the kit and equipment to make your business operational, then you might you’re able to focus on other things and spend your way improving other areas of your company. But unfortunately I have to deliver some bad news: machines can’t always be relied upon to do their job, and they will eventually let you down in one way or another. Sometimes it can be as simple as a cheap repair job for technology that is playing up. Other times, technology will outright stop working, be it through human error or just as one of those things that happens to machines from time to time. Even if nothing is actually wrong with your technology, it will need replacing every few years so that you’re able to stay ahead of your competitors. When this happens, you’ll be spending many thousands on kitting out your office all over again. But hey, you have to spend money to make money!
Keeping the Staff Well Trained
Your staff shouldn’t be a hidden cost: they’re fundamental to the success of your company, and should have as much interest in its prosperity as you do. That being said, there are some things that are out of your hand, and it has very little to do with the base wage of an employee. Whatever industry you’re in, your employees – and thus your company – will benefit from being up to date with the latest training, information, and ideas that are forming the future of your industry. This can cost a fair bit, especially when it’s spread over a year and there’s several employees who would benefit from training courses and seminars. Additionally, there could be some other employee training days that aren’t optional. For example, you might find that you need to invest in fire training, electrical safety videos, healthy and safety courses and the like, per your local regulation guides.
It can also be useful to keep your staff happy in their position, because having a high turnover of staff can waste a lot of company money, as it involves delivering new training, posting job adverts, new uniforms, and so on and so on. Just one more reason why you should be a kind boss!
You can’t do absolutely everything in house. Even if you could do it, it can waste valuable time when it’s a much more cost effective to outsource the work. That being said, paying an accountant to take care of the finances, investing in time saving software, and dealing with professional bodies can be expensive. Some of these might also be forced upon you, as in the case of hiring a lawyer to deal with any lawsuits that might come your way. Like it or not, small to medium businesses are often the subject of lawsuits (many frivolous, it must be said) that might not cripple the company but can eat away at its revenue, so try to keep a pot of ‘rainy day money’ somewhere in your finance plan.
If you’re dealing with inventory, you have to be prepared to deal with shrinkage. It happens to every company; things are stolen, things are damaged, things are lost. It’s not nice, and it does mean that you’ll be losing money. But we’ll end on a high note, because there are plenty of ways to reduce the amount of shrinkage in your company. If you have a store, having friendly engaged staff greeting customers and being a notable presence around your store can deter thieves, as can security cameras and a positive attitude with your staff. If you take the appropriate steps, you could end saving a lot of money, because nothing can impact a company more negatively (both financially and energetically) than preventable loss of stock.