3 Hidden Costs That Entrepreneurs Aren't Expecting

You have probably thought of a million different reasons why you want to become an entrepreneur because there are roughly a million reasons that make it such an attractive dream. Being your own boss. Doing that thing you’re passionate about. Working from home. Having no one else to answer to. Being responsible for something that you created. There are so many. But your dream can very quickly turn into a reality if you aren’t careful, especially when it comes to funding your dreams. 

You aren’t daft. You know that starting and running a business can potentially cost a lot of money. It is probably something you have accounted for in your business plan. However, what you may not be aware of, are all the hidden costs that are associated with running a business, hidden costs that could sink your ship quicker than iceberg sank the Titanic. 

Here is a list of three hidden costs you need to be aware of and account for: 

Permits & Licenses 

Every business starts with the same thing and that is paper. But it isn’t just the licenses and permits you need to launch your business that you need to budget for, it is those that will need renewing on a regular basis. Then there are the annual membership fees you may be required to stump up. All of these can add up, so don’t let them catch you out. The good news is, while there may be no way of reducing permit and licensing costs, which you’ll just have to stomach, it may be possible to get business-related discounts on your memberships, so always ask no matter what the subject is. 

Equipment & Maintenance 

Every business uses certain tools, whether you are a financial services business or a plumbing company. For a financial services business, it could be a state of the art Apple MacBook that is used for giving presentations, while a plumbing business may be using Opsty field service management software to ensure reports are created in a timely manner. Whatever the case, this equipment costs money to buy. Not only that but it may also cost money to maintain. The same goes for office chairs, scanners, coffee machines and everything else you can think of. As such, make sure you are getting a good deal with anything you buy, whether new or used and ensure you are buying quality. Always buy quality. 

Employees & Perks 

One of the most significant impacts on your business costs is going to be your employees. That is because there is so much more to consider than their salary. There is the cost of training to consider, annual leave, sick pay, health insurance, pension schemes, benefits and bonuses. Then there is the cost of keeping them at the company which, while expensive, is a lot cheaper than having to replace them. All of these are easily forgotten about until it is too late and you are struggling with cash flow. As such, always make sure you find a way to keep employee costs low while also offering perks that will attract and motivate top talent. It is also worth speaking to health care providers and seeing if you can negotiate a better premium than the one originally quoted.

I hope you enjoyed this article about planning for hidden expenses that catch many entrepreneurs and startups off guard.

Interested in more articles about frugal finance?

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Published by Michael J Schiemer
Owner of Bootstrap Business
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