By: Shannon White
As a business owner, you have come face to face with the fact that running a business is neither cheap nor easy. There are some factors that are obvious from the outset, inventory and employment cost come to mind. However, there are hidden costs that are important to identify so you are not caught unaware. Here are some often forgotten costs that can come along with a start-up, just as a reminder.
According to a study by the Kauffmann Foundation, a small business takes an average of $30,000 to get up and running. This isn’t the number for every business, some take hundreds and some take millions, but the average should serve as a ballpark for what you can expect your base costs to be. This can be the upfront costs, like real estate, web development, promotions, and licenses. However, this is only the beginning, and getting more rooted and established in your business will incur more costs, meaning success comes at a price.
If you use a loan to get your business off the ground, it can often come with terms based on your unique situation, which if you don’t have a background with great credit or experience in loan management can often start a cycle of high interest payments and descending credit that can be hard to repair. Ensuring you have enough to consistently make loan payments work is very important to budget for.
Insurance should grow with a business, when you’re small, you won’t need as much, but the more you have invested, the more coverage you will want to have. This can include policies like general small business insurance, liability insurance, workers’ comp, property insurance, and more.
How much goes toward each policy is unique to each case, but it is important to budget for so that you don’t get caught in the cold when you need it.
As an employee, taxes are likely something you don’t think much about, however, as a small business owner, taxes become a much larger part of life. The important thing to consider about taxes is that whether or not you profit, you will still have taxes to pay, and that can come as a shock for many.
Additional costs are not meant to deter you from going forward with your start-up or small business, but just to keep you aware to help guarantee success. It’s important not to let expenses get away from you, and having forethought in that area is key.