When you decide to open a business, the first thing that comes to mind is money. In fact, figuring out how much you need to launch is a job within itself. But once you get past that initial stage and start seeing growth, there are a slew of other expenses that pop up overnight. From renting a space to paying for inventory, the costs of running a business are a mile long. There are also a bunch of hidden costs you might not even know about. It’s these hidden costs that can quickly eat up any profit you make and if left to fester, can quickly put you in the negative.
Thankfully, there are ways to offset these potential risks and help you keep your ROI going in the right direction.
Get Your Debt Under Control
It’s safe to say that becoming a business owner comes at a cost. In fact, it’s not uncommon for entrepreneurs to not even know about these extra costs and end up sticker shocked when they pop up. In addition, you might already extended yourself and now have outstanding debt piling up. To prevent debt overload and possibly going under, you first need to get your own debt under control. Aside from cutting corners, you could apply for a personal loan and pay off your outstanding bills. This way, you only one payment to make each month, and your credit score will improve. Not having to micro-manage multiple bills will also lower your stress level, and allow you to focus on building your empire.
Customers are the backbone of any business. As such, you need to think about how much it really costs to acquire and maintain long-term relationships. Acquiring new customers is always more expensive than maintaining stablished relationships, so before you jump in and start running ads, you need to do your research. Pinpoint which platform and type of marketing campaigns will give you the most bang for your buck. You also need to be mindful of how quickly marketing costs add up. Take the time to learn how Facebook marketing works before getting started. It’s not always as easy as it seems, and you might end up wasting your money if you don’t know what you’re doing.
Even if you consider yourself an expert in your niche, there may come a time when you need outside help. This can come in the form of legal advice, extra help during the holidays or even hiring an accountant to help you keep track of your finances. One of the things you need to know about talent management is that good help can come at a cost. Since the cost of all three can add up pretty quick, it’s best to set aside a certain amount each month in a separate account. Even if you end up not needing any of these external resources, you’ll still be prepared for any other hidden expense with the money you saved.
If your business sells physical products, the cost of inventory management can be more than you bargained for. You need to factor in the cost of storing the good as well as proper inventory taking. Storing good at an external warehouse isn’t free, so as your customer base grows, so will the need for a larger space to store your products.
Brands are never built overnight. It takes time, consistency, and most importantly, money to make it happen. No matter what type of business you have, you need to build your brand awareness. This includes designing your website, attracting the right audience, and maintaining those relationships. While many social media platforms are free, you’ll probably want to build awareness by working with influencers or by advertising. Neither of these are free, so you need to also account for this hidden expense.
Software and Equipment
Software and equipment can also drain your account if you’re not prepared. When it comes to software, you need to think about which programs you really need and which are just for show. In terms of equipment, it’s best to shop around for the best price and also set aside money for emergency repairs.