Starting up or expanding a business is a pretty intense risk no matter how you look at it, or how much startup investment you have. Think about how the newer AI companies are burning through cash and making massive losses as they aim to try to become the main innovators in one of the most promising tech fields ever known. Billions are being spent each year to help give companies different avenues towards market dominance, and you can bet that the leads of these companies are sweating a little, hoping it all pays off.
However, they all know that to make money, you have to spend money. That’s just the way the market goes. When running your own small enterprise, you know you'll need supplies, equipment, and a solid map of where you're headed, just like these AI firms. But just like any journey worth taking, there are always those unexpected issues and hidden costs you may not be prepared for.
The best way to run a business is to be aware of all the components, hidden or not. So in this post, we’ll discuss what smaller costs you may need to keep in mind before you decide if that risk is truly worth it or not. With that in mind, please consider:
The People Factor
We tend to think about staff as a salary, but ithere’s more than that to it. You'll need employers' liability insurance, workplace pensions, and payroll software to begin calculating the full contribution need, and of course, the recent national budget means that employers will soon need to pay more in National Insurance contributions tax.
On top of that, you have to factor in training programs, workplace safety equipment, and team-building days that may be optional for some businesses, but really can help train them in a parallel way. Even providing decent coffee and kitchen supplies adds up over time.
Make sure you don’t forget about your own professional development either, as you still count in “the people factor”. Running a business demands constant development of new skills, even if it just means understanding what AI is and how it could integrate into your service packages. This training is somewhat at your own discretion but it’s best not to ignore it - the same way as not going to the dentist is survivable until you have a tooth issue, but it’s still best to go for checkups.
IT Infrastructure
It’s true that many companies now use modular managed IT services, some even providing equipment outright and perhaps letting you chop and change the services you need, but it’s till important to factor these necessities in.
You'll need security software, regular system updates, and probably some form of technical support. This might all be included in your main package, but it’s best to check. Some services may be disparate, such as those that provide your cloud storage, specialized software licenses, and website hosting.
Website management and maintenance is its own requirement as well, as it needs regular maintenance, updates, and occasional redesigns to stay up to date. Even if you're handy with technology yourself, there will likely be times when you need professional help, for instance, if your business suffers data loss and needs a way to prevent that from happening in the future, this could incur a fee. Any downtime cost needs to be calculated also, so you know exactly how much you stand to lose in case one of these services fails on you.
Administrative Costs & Paperwork
Now we come to perhaps the least romantic element of running a business, but it’s no less important. Legal and administrative costs have a tendency to grow if we’re not careful, and that’s never fun.
Of course, basic company registration incurs a fee, but you could also need trademark protection, professional liability insurance, or specific industry certifications on top of that. Each of these comes with its own renewal fees and sometimes requires professional guidance to maintain properly, such as consultants that can help you keep up to date. Depending on the business you run, that might involve using private auditors to come and check your business before the actual inspectors arrive - as is common in the hospitality industry.
Locations
Now, while it may seem that remote work has rendered middle-city offices obsolete, that’s not really the truth. If you're running a physical business, your premises will continually require service costs and maintenance management. This might be factored into rentals, but it’s important to be mindful about where those lay.
Of course, buildings need maintenance, utilities can change as you negotiate the contracts from year to year, and sometimes you'll face unexpected repairs or upgrades to meet changing necessities - even the cost of integrating solar or future methods can require a startup fee. Even home-based businesses might need to factor in things like increased energy costs or home office insurance depending on the kind of business they run.
Now, consider the lifestyle habits of running this business and the costs they could incur. That might involve parking rental or fees for clients, security systems to make sure the space is properly protected, or even just keeping the windows clean so the building doesn’t look unsightly from year to year. These might seem unnecessary, but they're essential for maintaining a professional image.
Loan Repayments & Interest
You may use software to manage your loans, handle your finances and manage repayments such as those that help you measure VAT loans and their use, but it’s also important to be clear about what obligations you have for repayments and interests on top of that. You can be certain that our aforementioned AI companies are certainly considering how their ever-increasing loans and investments will one day need to be repaid, even if being profitable isn’t on the cards anytime soon.
Now, provided the loan terms were tolerable, so will the repayments be. But keep in mind any administrative costs or perhaps any stipulations in your loans, such as how certain results might determine the changing structure of the loan provision.
Business Trips
We can’t expect to send staff to new locations without them needing some form of expense reimbursement, and some kind of living cost payment to ensure they can eat and find comfortable accommodations on the company dime.
That means ensuring you have credit cards and receipt tracking software put together so you can properly reimburse and pay for the entire trip, and allowing some kind of allowance for your staff to use can help them stay happy and fresh as ambassadors of your business.
This might also include company car use, even if that technically falls under the banner of vehicle rental on top of the aforementioned expenses. If you can offer those provisions then you’ll be much more likely to ensure those smaller costs don’t limit your representative. It’s always best to over budget for these necessities.
Booth Payment & Convention Attendance
Networking and being a part of trade shows is a valuable method of seeming like a present, worthwhile entity in your field. But the truth is that paying for rented booths, expenses like hiring presenters or demonstrating your idea, or booking timeslots for public speaking (and training for it in advance) takes a good amount of capital.
Also keep in mind transport and equipment costs, graphic design fees for outfitting your presentation, and any promotions you run at that time. It will impact your daily finances, but these efforts tends to be worth your time and money in the long run.
With this advice, we hope you can consider some of the added and compounding costs of doing business, so you never feel out of sorts when fees crop up.
Related Content