Running a business is hard work. Sometimes it’s like no matter how much you plan, there’s always something out of reach. Don’t feel bad. Operating an organization requires a lot of on-the-job learning. There’s a reason why the world’s top executives, managers, and business owners are paid so well – it’s not easy.
Of course, one of the trickiest aspects of being a business owner is predicting expenses. Here are five unexpected expenses your business may face this year.
Permits and Licenses
There are all sorts of permit and licensing requirement for most kinds of businesses. You will at least have to register your company with its incorporation state. Depending on locality and industry, you will possibly have to get further permits beyond this. These can be inexpensive, or potentially cost thousands of dollars.
For instance, restaurants are notorious for needing a wide variety of permissions. This can include a food service license, liquor license sign permits, music license, heath permits, and others. Not to mention the various types of business insurance necessary to keep a fledgling company protected from unexpected liabilities. Smaller organizations can struggle to keep up with these compounding costs if they aren’t careful. Thankfully, the solution is relatively simple. Just make sure you plan for these expenses ahead of time.
No matter what industry you are in, you are likely to be affected by broken machinery at some point. Computers are probably the most basic example of an object inherent to operations. These tools are necessary for running a successful company in today’s world. On average, firms spend $700 per user per month when all IT expenses are factored into an operations budget.
Manufacturing companies will also have large amounts of heavy machinery for putting together products. And logistics providers will need to maintain a fleet of vehicles. Repairs to heavy machinery or vehicles can run into the tens of thousands of dollars, easily.
Try to estimate how much you will need to spend fixing machinery this year. This is an expense that can quickly add up to a lot.
Say you moved from one commercial space to another. Did you check to see the energy rating of the new building? If not, you might be in for a rude surprise during periods of extreme heat or cold. Energy inefficient windows, insulation, and appliances can drive up utility expenses for organizations. Take the time to understand these things in order to save yourself a lot of cash later on.
No one wants to think about getting sued. Unfortunately, it’s something that can happen to just about anyone, in any field, at any time. Even the most responsible people can be faced with lawsuits. They don’t necessarily need to be legitimate. It’s essential to select business insurance policies that protect your organization in the event of a lawsuit. Otherwise you could be spending big bucks out of your own pocket to remedy legal actions.
Growing the Company
Not all unexpected costs are bad. You might find yourself with the opportunity to expand your operations. However, this will only be possible if you have planned ahead and budgeted for it. Of course, you can incur some debt in order to pay for growth. On the other hand, this isn’t a totally viable course of action for every business. It’s essential for executives to plan for potential growth opportunities.
It’s impossible to anticipate every cost that will come up over the course of the next year. This doesn’t mean you shouldn’t put any thought towards this at all. Take these six potentially unexpected expense into account when forming your budget.