When you first start with a small business, you will be well aware that there are some costs you have to spend. You might even have a detailed budget that lays out exactly how much you are going to spend on marketing, accountancy fees, and stock purchases. But at the bottom of that budget, you should also have a contingency line. A contingency is there to take account of any little costs you might have missed. But if you miss a lot of these expenses, then your contingency will soon dwindle, and your profits will shrink. Here are five business expenses that you may have overlooked, that you should put into your budget right away.
If you own premises then you will need facilities such as a toilet or a small kitchen. You will have to stock these little areas to make sure they can be used. The occasional bag of loo rolls might not sound extravagant, but the costs can mount throughout a year, especially if they are open to the public.
If your business is primarily run online then your outgoings might be relatively small. However, if you handle stock or products of any kind then you might not want your home to become cluttered with the stuff. Storage is essential to ensure that your business can always meet the demands of the customers. Find a reliable company, like storefriendly, that can offer affordable plans to match your business needs.
Shrinkage is the loss of stock or products that are not paid for. This may be down to numerous factors such as faulty returns, damage during transit, or accidentally shipping out more stock than ordered to customers. Every business experiences shrinkage. Even businesses that offer services and hold no stock can experience shrinkage. A service may take longer than accounted for with certain customers, or you may need to refund customers who complain. Shrinkage should be accounted for as much as possible by creating healthy profit margins for any item sold.
Many industries will have accreditations or standards authorities that ensure the customer is getting a safe product or service. Meeting regulations may be a legal requirement in some industries and others, it may just be a case of demonstrating best practice. However, be aware that you may also need to meet regulations not pertaining to your industry. For example, if you run a building, you may need to meet fire regulations and have a fire evacuation plan and fire safety equipment, such as certified extinguishers.
Finally, remember your business can be all-consuming at times. To maintain a high standard, you will need time off. Holidays should be taken into account, and you should budget for weeks in the year when you can close the business to allow for well-needed rest. It may be that an employee can keep the business running, but you will need to pay for their holiday time too, so always factor that into any salary you offer them.
By adding these little costs into your budget you will have a much more accurate reflection of the yearly expenditure of your business.