96% of businesses will fail within ten years of opening their doors, and one of the main reasons that this takes place is because of financial reasons. When beginning a business, you need to consider the start-up costs that you’ll run into getting things off the ground.
And while there are the apparent start-up expenses, there are some costs that will surprise you and leave you scrambling to find money to cover it. If you don’t want to be one of the many people surprised by hidden costs, you’ve come to the right place.
In this article, we’re going to detail costs that you may have overlooked if we hadn’t told you about them. Without further ado, let’s get into the list of costs you didn’t plan for.
1. Market Research
Before you start your business, you’ll need to research the niche market that you’re entering. You’re going to do this to understand the moves that your company is making and the strategies that they use to conduct business.
Knowing what your competition is doing can help you ensure that your business practices are better and more effective. While this should be done to improve your business’s success, it’s not cheap and not a cost that you consider when detailing start-up costs in your business plan.
2. Management Expenses
Another area that can easily be overlooked is telecom expense management. What is telecom expense management, you may ask? It’s the cost of things like auditing your business tax filings.
These management services also help manage the invoices that your company sends out to collect payment. These expenses will eliminate the likelihood of late payments, and they also aid in the management of your company accounts.
While all of these things ensure that your expenditure books are kept in order, the expense to cover these services are not free. Therefore, you’ll need to have money allocated to this area of costs in your budget to continue receiving these beneficial services.
3. Insurance Costs
One of the mistakes that are commonly made by businesses is not paying your company insurance. This can leave your company in a detrimental situation if you need insurance coverage.
You’ll need insurance to cover various things, including:
- Employee medical insurance
- Workers compensation
- General insurance
- Vehicle insurance
Ensuring that you have this insurance will keep your company and employees covered no matter what the situation. The cost of insurance protection is an expense that may initially be thought of, but can easily be forgotten as you continue to conduct your business.
Although insurance is on the expensive side, you’re going to want to have it just if you need it.
4. Business Permits
When starting a business, it’s understood that you’ll need to have business permits and various licenses. What’s not commonly known is that when you apply for these multiple permits and licenses, you’ve got to pay for them.
These costs may not be expensive, but you will have to renew your licenses when they are close to expiration to ensure that you can continue to provide your products and services to your customers and other potential clients.
5. Debt Repayment
In the early stages of your business, you probably received capital from a lender. The lender allowed you to borrow a specific amount of money under the agreement that you paid them back.
Once you have begun to increase your company’s revenue, you’ll need to work the monthly lender payments into your list of expenditures. Not paying back your loan can leave your business in a position that could cause you to have to close your days if you don’t make the payments that you agreed upon.
Your company accountant should have a list of the expenses that need to be paid each month, including debt repayment.
It can be easy to forget about your taxes when you’re busy conducting business regularly. However, this is not something that you want to forget about.
You’ll want to work with your account to ensure that you’ve set aside the necessary amount of money to cover your business taxes. You’ll need to keep a detailed record of all the gains and losses that your business took on during the tax year in question.
7. Employee Expenses
Hiring employees takes more money than you may have imagined. When you hire employees, you’ll need to have funds set aside to cover the following:
- Background checks
- Drug tests
- Pre-employment testing
- Employee salary
From the beginning of the hiring process, and throughout the time that an employee works for your company, there are various expenses. It takes money to use job listing services, and it also takes money to pay for the benefits provided to employees.
As the world and your competition become more advanced in the area of technology, you’ll need to keep up with them. This means using expenses to update your business technology systems.
You’ll need to purchase new equipment for your employees to work on and software and software security to protect all of the data that your company acquires from clients. You’ll need to dedicate funds to building a website and paying someone to keep the site updated with company information.
As science continues to come up with ways to advance technology, your equipment will become outdated, and you’ll need to purchase newer equipment every so often. To ensure that you get the most use out of your equipment, you’ll also need to have funds aside to pay someone to make regular repairs.
Start-Up Expenses Explained
When it comes to start-up expenses that you didn’t know about or didn’t account for the list that we’ve compiled has an in-depth explanation of the expenses you didn’t think about. Ensuring that you’ve created a budget to allow for these expenses will further your business’s success.
We hope this article was full of information that helped you continue making the best decisions possible for your business. If you’d like more advice about other topics, continue scrolling through our blog section.