When starting a new business, there are all kinds of costs to take into consideration. These are well-known costs that any entrepreneur is usually aware of and has a plan to deal with. But what about costs that can be hidden, or are less talked about? These still affect the bottom line, so they are still worth factoring in.
Here we’ll take a look at the additional costs that new business owners can sometimes forget about, or may not be aware of at all.
The Office Set-Up – Consider Leasing as Much as Possible
If you need to rent space for your company and your staff then there’s a good chance you’ve already factored in the rent, property insurance (if applicable), and utilities, but what about all the “other” overhead costs? Things such as computers, printers, furniture, and the phone system can be pretty big expenditures.
For new businesses that don’t have a lot of capital to spend, it’s a good idea to look into renting or leasing equipment. It tends to be much more affordable this way, items often come with a warranty on them, and you know you’ll be able to switch them out for new equipment at the end of the lease period. Your employees will have access to high-quality equipment needed to perform their job, without having to spend a fortune.
Because some equipment cannot be rented/leased, you may not have any other option but to buy it outright. If that’s the case, inquire about an extended warranty plan. This can save you a lot of money in repairs should anything go wrong with the item.
Also included in setting up a space for employees is the office furniture. There’s a good chance you don’t have a stockpile of furniture just sitting around waiting to be used, which means you need to either purchase or rent items. Again, renting/leasing is usually a more affordable option for new companies, and typically you will have a wide range of items available to choose from.
Consider a Temporary Office Rental
If you’d like to avoid all the additional expenses listed above, you may want to look into renting a temporary office space that comes pre-furnished with all the equipment, furniture, and tools needed. Some even come with support staff such as a receptionist.
This is a great idea if you don’t know how much space you need, how many staff you eventually plan on hiring, and are just really looking for a temporary solution.
What About a Break Room?
It’s well documented that happy employees perform better than unhappy employees, so creating a work environment that is pleasing and comfortable should be a priority. This means you will want to offer your employers a break room of some sort where they can eat their lunch/dinner, and grab a snack during the day.
Typical items to include in a break room include a table and chairs, a microwave, a small fridge, a sink, a coffee maker, a water cooler, and dishes. Depending on your budget and the space available, you may also want to include a small couch and TV to add some comfort.
Credit Card Fees
Again, this refers to companies that are selling goods and services to customers. If your customers are able to pay for their purchase by credit card, then you will be looking at paying vendor fees. These typically amount to 3% of the total charges. While this may sound like a small number, over time it will definitely add up. What this means is that you need to factor in this vendor fee when purchases are occurring.
At the same time, if you are using the company credit card to make purchases for the business, you need to be aware of interest charges. If the bill isn’t paid in full and on time, then that original purchase becomes more expensive thanks to the interest. The good news is that this particular hidden cost can be avoided all together, as long as you pay in full by the due date.
Keeping the Office Clean
Keeping the office clean is another priority. While it is expected that your employees keep their own area tidy and organized, it will also need to be cleaned professionally at least a couple of times a week. It’s a good idea to start shopping around for professional cleaning services that will come in during non-business hours and clean the office.
Keep in mind, you will want to discuss your expectations and any rules you may have before the cleaning company starts their contract. Make it clear what areas need to be cleaned and if there are any areas that are “off-limits” due to sensitive materials, hazardous materials, etc.
Employee Associated Costs
There are also costs associated with employees. These include such things as Medicare and FICA, workers compensation insurance, health insurance, state and federal unemployment taxes, and much more. These costs can add up rather quickly, so you will want to be sure you have a firm grasp on how much they will be.
Factor in Shrinkage
This particular hidden cost is one that applies to companies that carry inventory. At some point, shrinkage is bound to happen. What this means is that there is a loss of your inventory between the purchase from the supplier and the purchase by the end customer.
There are all kinds of reasons for shrinkage to happen, such as damaged products, products lost in transit, and even theft. Experts believe that up to 1.4% of a company’s total sales are lost to shrinkage each year, which is a number you’ll want to be aware of. Obviously, as a company you will do everything you can to prevent shrinkage from happening, but it is inevitable from time to time.
Don’t Find Yourself Surprised by Hidden Costs
Being aware of these “hidden costs” will allow you to be better prepared as you open the doors to your new business and all that awaits it.