by Jerry Mooney
They say that money can’t make you happy, but it certainly makes life easier. It is also the fuel source that keeps the business world spinning around. For that reason, it should be no surprise that lack of capital is the main reason why such a higher percentage of startups fail. Proper money management is a must for entrepreneurs, but, with so many hidden costs to find, this task can be quite the challenge. To make your life easier, here are six of these costs to consider.
1. Insurance
When your first start your business, you probably won’t need very much coverage, especially without any employees. However, as time goes on, and you begin to grow, your need for certain policies, like liability insurance, workers’ compensation insurance, and cyber insurance, is going to increase. Each policy could easily add one thousand dollars or more to your yearly budget.
2. Employee Benefits
You’ll likely start your business all on your own, but as your company grows, you’re going to need to bring on staff to handle the extra workload. While you probably understand that hiring and paying these staff isn’t going to be cheap, you need to remember that you’ll also need to offer benefits, like overtime, paid sick and holiday days, and other small rewards and incentives.
3. Legal Fees
No one goes into business expecting to generate lots of legal fees, but that doesn’t mean that it won’t happen. Although insurance can protect you in many cases, it doesn’t always, and even if it did, you could still see your insurance premiums rise as a result. To protect yourself and stay on the right side of the law as much as possible, you should hire professional legal advice.
4. Shrinkage
Any company that sells physical products has to deal with shrinkage at one time or another. In short, this is the loss, theft, or damage of stock before it has a chance to be sold. As you can likely imagine, this is a huge issue that can prove to be incredibly costly. If you’re aware of this issue in your business, then you need to do all that you can to avoid and prevent it.
5. Office Space
Whether you’re planning to buy or rent, office space is far from cheap, and neither is paying to decorate or furnish it. From desks and chairs to paint and commercial carpet, there are a number of things you’re going to have to buy to create a functional and attractive workspace. You’ll also need to hire a cleaning company and have your equipment maintained and repaired.
6. Expensive Loans
It’s always better to fund your startup venture yourself, but, unfortunately, this isn’t always possible. For this reason, many entrepreneurs apply for some sort of loan to kickstart their company. Unfortunately, without any business experience, your loan terms will likely be based on your personal situation. This could lead to some high-interest rates and costly loan repayments.
Whether you’re planning to start a business or have already launched your company, make sure that you’re aware of the hidden costs involved.