If you run a small business or are thinking about starting one, it can appear deceptively simple to get started. You probably set out with a dream and not much else powering your idea, and before long you encountered financial roadblocks that make getting your business off the ground seem impossible. Here are some of the hidden expenses you’ll encounter running a small business, along with some tips for dealing with them.
Retail and Storage Space
For online stores, space may not seem like it’s going to be much of an issue. You could just keep inventory at your home to save money. But once your business takes off, if you’re lucky, your home will quickly become too small to accommodate your storage needs. The cost of renting out storage space can be overwhelming, especially if you’re not anticipating and budgeting for that expense. In addition, if you eventually need to hire help for packaging and sending orders, marketing, sales, etc., you’ll need to accommodate these new employees somehow. Renting out a temporary office space is a great way to deal with fluctuations in business when you’re uncertain whether you’ll need the extra space forever or just for a few months.
Permits, Insurance, and Dues
One thing that might surprise you about starting your business is just how much paperwork can be involved. There are licenses and permits required before you can start selling, and depending on how big your enterprise is and how much space you’re planning to use, those costs can really rack up. Add on the cost of relevant fees like clothing store insurance and you’re probably wondering how you’ll make back all the money you spend just opening your store. One way to get ahead of these costs is by joining any local networking groups for business owners. These groups can sometimes provide discount codes for insurance, as well as give invaluable advice for less experienced business owners.
When it comes time to start adding new people to your business, the prospect can be daunting. Running a business can be stressful, and having people on the payroll just adds to that pressure. Not to mention attempting to be competitive has costs of its own. You may find yourself wondering just how many benefits are necessary to start attracting applicants.
The best tip for lowering hiring costs is to do all the spending upfront. Offer competitive wages, good benefits for your industry, and perks like flexible hours and work-from-home options. Being a good employer will help with retention, which is the real life hack for saving money on your workforce. Having to hire, train, re-hire, and re-train on a regular basis will drain money faster than offering benefits will.
Loss of Inventory
At some point in your business’s history, it’ll experience “shrinkage”, which is a term for the loss of inventory that can happen between the supplier and the customer after a sale. There are many reasons that businesses can experience shrinkage, from incorrectly picked inventory to theft. This is why it’s important to monitor and manage inventory properly. It may be possible to track sales and inventory at the beginning using pen and paper, but eventually, it’s necessary to invest in a barcode and scanning system in order to prevent too much shrinkage.
Time is your most valuable resource as a business owner. Once you have employees and a lot of moving parts, it becomes harder and harder to track everyone’s use of time. Not only can time be wasted by a lack of efficiency, but there are often redundancies in business practices that cost a lot of time, as well.
As the owner of your business, it can be tough to know when you’re spending too much time on your business that could be delegated to a trusted employee. Thankfully, there are many management software tools out there that can help you know where time is being wasted and how to remedy that. Running a business can quickly become your entire life. While it’s important to invest your time into your business to make it successful, it’s important to achieve a good work-life balance whenever possible.