Irrespective of what anyone informs you, running and operating a business is not easy and cheap. Besides the expenses you actually know of, there are few other hidden costs associated with running and operating a business of your own. If you aren’t careful enough, this can erode your bottom line and leave you feeling unfortunate about the entire situation.
A study by the Kauffmann Foundation shows a small business startup usually requires an average of $30,000 to get off the ground and start operating. There are small businesses which take $300 and $3 million but this average figure offers a nice estimate of what the entrepreneurs are diverging over. Startup costs keep accumulating but you will at least know what you should expect. It’s pretty easy to price things like website development, real estate, opening promotion, license fees and all the other things which move into starting a business.
Few hidden costs associated with running a business
If you’ve taken a close look at business-related researches, you must have seen that 9 among 10 business startups usually meet failure. There are indeed various challenges associated with sustaining a business over a long period of time. Here are few costs and pricing issues which businesses face.
- Expensive and costly loans
Majority of the entrepreneurs require some kind of loan to finance a startup business. This might come in the form of a commercial loan either from a conventional lender or a bank. If you’re a novice business owner without any credibility and good image, the loan will most probably be lent to you checking your present financial situation. You will get bad terms on a loan if you have a poor credit score. Once you receive poor terms due to poor credit, you start incurring debt. This drags you deeper into business debt.
- Communication costs
A business organization, regardless of its type, has to make a number of calls to clients placed both nationally and internationally. Staying in touch with them and communicating is yet another hidden cost which most business owners forget to consider. The cost of making international calls to clients is huge and there are many owners who fall in trouble while meeting these costs. Though you can now use international prepaid calling cards to make calls at a cheap cost, yet you should set aside some funds to be able to pay off those costs.
- Employee perks and benefits
Only paying an employee in terms of salary is not all that you need to calculate. If you don’t take into account taxes, perks and other benefits, you will soon find yourself in a mess. Although salary is the main thing that needs to be taken into account, yet there are other factors like worker’s compensations, taxes, perks like retirement, healthcare and vacation and travel costs. When have several employees in your office, it is necessary that you consider all such costs.
- Shrinkage costs
For all those companies that deal with physical products, there is a huge cost of shrinkage that you should consider taking into account. Whether unintentional or purposeful, shrinkage is a big cost and amounts to an average of $46 billion every year within the US. Employee theft, shoplifting, vendor fraud and paperwork mistakes can lead to shrinkage issues and hence such mistakes should be avoided at all costs.
So, now that you get a clearer idea of all the hidden business costs associated with running a business, take an informed and measured step forward. Make sure you avoid all blunders that can push you towards incurring more costs.