Throughout the business cycle, unexpected costs will arise. “If businesses want to keep up with competitors and ensure they maintain and grow their market share, they will want to ensure that they continue to invest in technology and new processes,” Ossip explains.
#HIDDEN BUSINESS STARTUP COSTS SOFTWARE#
This can lead to additional costs when replacing items.īusiness owners should consider the cost of updating software and business processes within a changing business environment. “It is prudent to maintain and service equipment and property to keep it in good running condition for longer rather than having to replace the items or property regularly,” Ossip says.īusinesses selling physical products can experience loss of inventory, which may be as a result of theft, damage and errors. It is important to factor in the costs of maintenance, servicing and repairs to buildings and equipment. Including business insurance in your financial plan helps to protect the business assets and gives you cover for unforeseen events the modern-day business may face, such as cybercrime and reputational damage.Ĥ hidden costs that affect cash flow when running a business While you may not consider insurance a necessity when you just start your business, Ossip says that business owners should also consider the benefits of having business insurance upfront. You also need to be aware of any fees that you may need to pay or permits you need to obtain to operate in your chosen field.Īdministrative costs include phones, printers, filing cabinets, office stationery, and office cleaning supplies – small costs that add up quickly and need to be included in your financial plan and budget. This includes software licenses, computer accessories, cloud storage as well as the maintenance of technology assets. Here, you may also have costs related to legal or financial consulting services. For example, the costs of marketing, where you might hire a freelancer as opposed to a full-time employee. Think about the costs of the specific services you will have to use. But, hidden costs for employees can come in the form of training, uniforms, medical aid, transport costs and other basic employee needs. You may know your monthly salary payments. Small business owners need to consider not only the cost of providing a basic salary, but also all employee-related expenses and benefits. When you take a loan, you need to be aware of the interest payments on this loan, which can increase monthly repayments and the total loan amount. Many new business owners will need a loan to start the business. It is rare to have the upfront capital in cash when you start a business. The first step is to identify all the known and hidden costs that can affect your business and to include this in your financial plan,” says Ossip.Ħ costs that affect cash flow in a new business “To make sure that your business doesn’t fall victim to all the small things that can eat up your profits, you need to have a practical approach. In this article, Discovery Insure CEO, Anton Ossip, unpacks some of the costs that creep in or that you can forget about when starting and running a business. In this time, there are many hidden costs and, as a business owner, you have to make sure that you have the cash flow to cover the everyday running of your business. It’s time to stop and take a closer look at where all your profit could be going.ĭrawing up a good financial plan is only the first step to making sure your business reaches the potential you dream of and that is doesn’t become part of the very harsh statistic that 50% of new businesses fail within the first five years.
But every month your bottom line seems to be less than you expected. So, you’ve got a solid financial plan for your business and now you’d like to start making a profit.
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