7 Hidden Costs of Starting a Business

We’ve all wondered what it would be like to be the boss of your own business. Calling the shots, turning up when you like, shouting orders – it’s the entrepreneurial dream!

However, it’s not all fun running your own business. It takes a lot of commitment and time – but, most of all, money.

Every business is different, but there are some common costs that you can expect to encounter when setting up a business. Here are seven hidden costs to consider before turning your idea into a reality.

1. Permits and Licenses

Depending on your business type, you might need certain permits and licenses. For example, if you’re selling alcohol, food, or beauty treatments, you’ll need a specific permit or license.

Not only is this an upfront cost for your startup, but you’ll also need to renew your license annually. Prices for permits or licenses can vary depending on their speciality and the business size. It could cost you anywhere between £100 and £2,000.

2. Loan payments

Starting a business without a bank full of money is impossible. To overcome this hurdle, many people seek out loans to get them started.

However, this isn’t a freebie; you eventually have to pay this money back. You might think you’ve had a profitable month in your business, but you haven’t factored in the monthly repayment of your loan. This can quickly topple your finances if you don’t factor it in correctly to your monthly budgets.

3. Employee expenses

These costs aren’t just your employee wages. If you have a team of people helping your business, you must factor in their uniform costs, equipment, training, and staff room maintenance.

Plus, this doesn’t cover any extra bonuses. Employee bonuses are a great way to keep employees in your business while making them feel valued. Bonuses can include things like discounts, commissions, and extra holiday days.

4. Insurance costs

The type of insurance a business needs varies depending on your industry. Therefore, the cost of insurance can also vary.

This cost shouldn’t be overlooked. For example, if you work alongside the public, you can rest easy with public liability insurance. This insurance would protect you if a client were to press legal action against you for a mistake or accident that affects them. This could potentially save you a lump sum down the line, so don’t overlook the importance of insurance.

5. Supplies

Again, your supply cost can significantly vary depending on your business type. If you own office space, you’ll need to deck it out with desks, chairs, and storage. Plus, you’ll need a staff toilet with supplies if you have physical premises.

Also, more and more businesses are committing to buying environmentally friendly resources. From compostable coffee cups to recycled office chairs, there’s always something your business can do to better the environment.

6. Membership prices

When you started your business, you might have signed up for different industry groups or your local Chamber of Commerce. This is a great thing to do to get your company’s name out there.

However, it’s easy to forget this annual fee. Unexpected costs can greatly affect your cash flow, leading to serious problems.

7. Repair costs

No one can predict when something will go wrong or break. But, you can always prepare for the worst to avoid being short on cash.

From equipment to staff facilities, countless things in your business could break. Sometimes the fix is easy, but other times you might need to replace the issue altogether. This could put you severely out of pocket.

No surprises

Owning your own business can sound like a dream, but it can quickly become a nightmare without good money management. Knowing the hidden costs of owning a business will help you understand the whole picture.

Always create a detailed plan before committing to your business idea. In this plan, you should include the hidden costs discussed in this post, giving you a greater picture of your business’s future.