There are over 30.2 million small businesses operating in the United States today. However, despite this high number, starting and funding a small business is no small task. These hidden costs of starting a business are seldom talked about, despite the fact that they play an integral role in building a successful company.
If you’re considering starting your own business, here are some of the hidden costs that you need to know about before getting started. Considering all of these points beforehand can help you develop a more effective strategy for success and further ensure that your business will grow and build revenue.
Permits and Licences
One of the most significant hidden costs of starting a business includes acquiring all of the necessary permits and licenses. These permissions usually need to be renewed after a specific time and these renewals should be factored in when starting out. While licenses usually won’t break the bank to acquire, they are crucial for being able to stay in business, so this is one point you don’t want to overlook.
Additionally, many small businesses utilize loans when starting out. Depending on your credit score at the time you take out the loan, you could end up with some negative terms. This means you’ll end up paying thousands more in interest rates over the life of the loan. This can severely impact the revenue produced by your business and make it harder to stay above the bottom line. To prevent this, make sure that your credit is high and that you thoroughly research the terms of any loans before taking them out.
Property and Building Maintenance
Some of the most significant hidden costs of starting a business come from the property and maintenance costs associated with a rented or owned business space. While some startups can get away with a home office, that won’t work for all business types. Consider how much space you need for the type of business you are starting while also factoring in things such as retail space, employee areas, storage, and overall customer capacity. Starting a brick-and-mortar retail business will have drastically different requirements than a business that is focused mainly on online operations.
Once you’ve chosen a location for your business, you’ll have to move everything into the building before you can get started. This means hiring a moving company, as well as paying for help to get everything set up the way it needs to be. Depending on the type of business you are starting, this can mean anything from office supplies to food preparation equipment. Some equipment may even require a specialized technician to install. All of this should be considered ahead of purchasing your business space to ensure that it’s both affordable and large enough for any equipment you need.
If you are starting a walk-in retail service, you’ll have to consider hiring additional services to help keep yours running smoothly. For example, if you have a parking lot, hiring parking lot maintenance services will be crucial for keeping it clean and safe for both customers and employees. Furthermore, parking lot clearing services will be essential for businesses during winter months in snowy climates. This may also mean hiring a snow removal company (if your summer maintenance service doesn’t provide it) to ensure that customers can get into your parking lot and into your store without snow or ice creating a safety hazard.
Another hidden cost of starting a business, whether it is retail or office-based, is waste removal. Regardless of the type of business, you will need to hire a commercial waste removal service to help handle the trash that can build up when multiple customers and employees are throwing things out throughout the day. This service is necessary for keeping your business clean and free of garbage build-up that could otherwise attract rodents and pests, neither of which will be beneficial for any business. Proper trash removal will be especially important if your small business produces or sells food items.
The maintenance of heating and cooling systems represents another of the hidden costs of starting a business that you should consider when purchasing or renting operational space. For instance, if you’re starting a culinary business, efficient cooling will be essential for employees working around stoves and ovens all day. Additionally, for businesses in parts of the country that experience cold winters, having adequate heating will be necessary. For these reasons, it’s important to check out the HVAC systems of any locations you’re thinking of renting or buying before putting down any money. You may even consider having a professional take a look at the system, as well. Older furnaces, for example, could potentially go out if they’re on their last legs. If this problem isn’t caught ahead of time, you could risk footing a large replacement bill in the future and dealing with an uncomfortable cold business space until the replacement is put in.
While temperature control, trash removal, and moving are things that you can’t easily overlook for long, there are other building-related expenses that you might miss. For instance, regardless of the type of business, maintaining the plumbing will be important. Plumbing is easy to forget about until something goes wrong. However, if something goes wrong at your business, it could lead to impacted business costs as well as uncomfortable working conditions. Additionally, plumbing can be essential for some businesses, especially those working with food. Faulty plumbing in a kitchen workplace, for example, could lead to a complete shutdown if something goes wrong. For this reason, it’s important to consider this as one of the hidden costs of starting a business.
Additionally, the plumbing in bathroom spaces for both customers and employees is something to consider. If plumbing is frequently breaking down it could lead to some customers or even employees thinking negatively about the business as a whole. For these reasons, utilizing commercial plumbing services is essential for maintaining your business as a whole and your reputation.
Similar to the plumbing is the ventilation of your business space. While ventilation is critical for businesses that work with chemicals or other inhalants that need to be vented out, general ventilation is important for all businesses — especially for maintaining employee health. Consider an office building on a hot day; without the proper ventilation systems, it can quickly turn into a stuffy and uncomfortable place to be. This can also be said of culinary businesses where hot ovens or stoves are being used throughout the day. Without ventilation, this heat can build up, as can the smells of anything cooking. Ventilation like this can also be beneficial for employee breakrooms and bathrooms to ensure that no unpleasant scents build up.
Older buildings, in particular, can have ventilation problems. Professional ventilation services can be used to check vents and clear out blockages, as well as give you advice on when the system should be updated. They can also advise on how the system can be improved and optimized to ensure that your building stays as comfortable as possible.
Daily Business Operations
Another of the hidden costs of starting a business is the cost of daily operation. This includes things such as energy consumption, a telecom system, off-site storage, supplies, and employee benefits. To understand how these costs can impact operations, let’s look at these individually.
By far, energy consumption is one of the most significant hidden costs of starting a business. Consider all of the lighting, heating, cooling, appliances, and computing equipment that you’ll be using at your location. The energy costs of all of these things can add up quickly and end up putting a large dent in profits if you’re not prepared.
Similarly, you’ll need to consider the cost of telecom services and internet, as well as cybersecurity, all of which as essential for businesses today. These services will be especially important for businesses that are more online-focused. For instance, if you’re small business primarily sells products online or offers online services, internet, phone, and security will be critical. The energy costs of online businesses are also worth considering, as mentioned above.
Another of the daily hidden costs of starting a business is storage. Storge is important for any type of business, though it is especially important for those selling products that need to be stocked on shelves or mailed to consumers. Without proper storage, your business could risk running out of the products you need, causing consumers to look elsewhere or forcing certain operations to be put on hold. For this reason, it’s important to consider the storage solutions that your business will need. This can include ensuring that you have enough space on-site for storage or renting off-site warehouse space nearby.
Even offices that don’t actually sell products direct to consumers will need ample storage space for necessary supplies and equipment. For instance, if your startup business specializes in digital solutions, your employees will need for desks, computers, scanners, and fax machines. You may also need space for a data center to ensure that you can store all of your online information, as well as run your daily electronic operations. Data centers alone can require quite a bit of space, in addition to extra ventilation and air conditioning, all of which should be considered beforehand.
Furthermore, another one of the hidden costs of starting a business involves taking care of your employees. Employee benefits can be easy to underestimate until it’s too late. Even businesses that only employ a handful of people can easily become overwhelmed due to the costs of providing for their employees. Consider the wages that you’ll have to pay, either hourly or salary, as well as how holiday pay, sick leave, vacation days, and overtime will impact your bottom line. You’ll want to make sure that you can provide a fair wage to everyone while still maintaining a successful profit to stay afloat.
Additionally, the costs of employee insurance is another thing you’ll have to consider. The costs of covering insurance for doctor and dentist visits can stack up if not considered thoroughly. Be sure to investigate all insurance options before beginning the hiring process. During this time, factor in how many employees you’re seeking to cover, as well as the type of coverage you’ll be able to pay for. While you want to give you employees good benefits, oftentimes it’s best for small businesses to improve benefits overtime as profits grow. This ensures that you won’t have to struggle constantly and can instead focus on building your business so that you can offer better coverage in the future.
Lastly, one of the hidden costs of starting a business that can be easy to forget is the cost of daily supplies. Most businesses will need office supplies in the form of paper, printer ink, pens, and the like. A 2014 report found that, on average, small companies spent between $922 to $1,106 per employee on these office consumables. Depending on how many people you employ, this amount could be considerable if you’re just starting out. While costs can be cut by turning to digital solutions or working directly with vendors to procure discounts on items, it’s important to factor in these daily costs to ensure you won’t break your budget.
Leave No Stone Unturned
When considering starting a business, you should never rush into the process without having taken every aspect into consideration. The hidden costs of starting a business can often leave new companies dead in the water before they even get the chance to succeed. Take time to research the type of business you’re considering opening, and thoroughly examine the unique costs of operation that go with it. By getting a general estimation of costs beforehand, you can help anticipate how much you’ll need to invest to ensure that your company can get up off the ground and start making a useable profit.
You may also consider hiring an experienced business manager to help combat the hidden costs of starting a business and allow you better insight into how you can tackle any upcoming problems. By working with someone who has business experience, you’ll have a better chance of starting up a successful business and sustaining it for years to come.