You don’t need us to tell you that startups are expensive. Anyone who undertakes this goal knows the expenses involved. Even if you start with an idealistic view, the real costs soon make themselves known. But, some expenditures are more obvious than others. For example, the costs of materials and business spaces are apparent from the off. Most business owners prepare and don’t take leaps until they have money behind them. The bad news is, many business dreams end because of unexpected costs that have a habit of creeping up. These are harder to prepare for, as they’re unknown, often until it’s too late. The best way to protect your enterprise is to know what to expect. Here are some costs you may not have accounted for.
EMPLOYEES
When starting out, surprisingly few entrepreneurs consider the costs of hiring. The idea of becoming an employer may not have crossed your mind when you started. When business is small enough to manage yourself, you can’t imagine needing help. But, whether it’s your aim or not, your business has the potential to grow. If that happens, the idea of employing others may not seem so out of reach. In fact, not taking this step could stop you moving forward with the product you’ve worked so hard for.
But, what are the costs of employment? We all know about wages, to start. You need to offer competitive salaries, which reflect the amount of work you expect. You’ll have to decide whether to provide a salary or an hourly rate. To start with, a salary may be your best bet. But, this is far from the only consideration you need to make. You’ll also have to pay holiday and sick pay. Plus, you should make contributions towards pensions. It soon adds up!
The best way to ensure things don’t get out of control is to know exactly how much money you have to play with. That way, you can offer a realistic wage, or take on fewer people according to your budget. If you don’t take this step, you could fast lose significant amounts of money.
RUNNING COSTS
Running costs are another unexpected expense. When you’re operating from home, these will be relatively small. But, as soon as you start to expand, you may be in for an unpleasant shock. Running an office is no cheap feat. You’ll have to pay electric and heating bills, which could be through the roof depending on the size of the space. The best way around this issue is to shop around. Don’t settle for the first company you find. Compare, and play companies against each other. Commercial deals are big money for them, so you should have some room for compromise.
If you’re open to the idea, it may even be worth looking into alternative power sources. These will save you the monthly costs, and reduce your business’s carbon footprint. What’s not to love? Installing solar panels to your business space could be a fantastic move. You could even install a linear actuator. These small motors mean your solar panels can follow the sun. And, that means more energy! Bear in mind that there are some startup costs for this option. But, once you know what those are, it’s a goal you can work towards. And, you can rest easy that you’ll save enough money to cover those costs in no time.
REIMBURSEMENTS
You may also have failed to consider the potential costs of reimbursements. In an ideal world, this wouldn’t be an issue. Your product would be perfect each time, and your customers would always be happy. But, that’s never how it goes, especially to start with. In business, you learn as you go. Your product isn’t going to be perfect from the off. Even if it were, you’d still get customers who weren’t satisfied. That’s just the way it goes. To ensure you don’t tarnish your business, reimburse anyone with a faulty, or unsatisfactory product. Often, you’ll need to refund the money they paid and offer bonuses on top. It’s painful, but it’s the best way to ensure a complainant leaves happy. If not, they may go and tell their friends how bad their experience was. That’s not what you want.
There’s little you can do to avoid this eventuality, other than to set aside money where you can. Accounting for this possibility is the best way to afford the costs. In the meantime, take all complaints on board and try to improve your product!
