Starting a new business usually requires you to have a fair share of resources up your sleeve but calculating the exact amount might be a bit tricky. Sure, you may know the costs of hiring a team, leasing out an office and getting all the certificates but what about the hidden costs? We are talking about things that may seem quite situational, yet occur with an astounding frequency. With this in mind and without further ado, here are few hidden costs of starting a business you should definitely consider.
Maintenance and Upgrade of Equipment
Everyone knows that in order to start a business, you need to get proper equipment. However, this is not where your story ends. You see, maintenance and upgrade of your equipment can also be quite costly and there are several ways in which you can deal with this. For instance, you can go with managed IT services or even decide to rent your equipment. Although both of these methods may cost you a bit more in the long-run, they give you a fixed price you can use for your budget estimates and allow you more flexibility in the above-mentioned fields of maintenance and upgrade.
Asset & Resources Insurance
Another thing you need to consider is the cost of the insurance. Here, you have issues such as employer and public liability coverage, insurance for property, insurance for negligence, not to mention employee illnesses and injuries. The price you will be forced to pay, however, isn’t fixed and different providers may have different offers for your business. In fact, with the right leverage and negotiation skills, you can even get an unexpected discount, which could make a huge difference in your current budget. Here, it is all about rates and coverage and estimating these two aspects of your insurance deal usually isn’t that hard.
In the introduction, we mentioned that the office lease usually ends up being one of the greatest expenses on your list prior to starting a business. Still, sometimes you can save a considerable amount by renting an office with a few ‘flaws’ and then repairing it from your own budget. In other words, you can use these flaws as a bargaining chip in order to lower the rent and then use this surplus to hire someone for these repairs. According to experts behind the Relining Company, this is a common tactic which tends to give a new business owner a surprisingly reliable ROI.
The next thing that gets a prominent place on one’s list of expenses are the salaries of the employees. What people tend to overlook are the employee perks, which are also you need to think of. These are particularly important if you are to attract the best talent. Paid vacation time, maternity leave and sick leave are just some of the issues that commonly get overlooked. You see, while an employee works, they are actively earning their salary by contributing to the team. During this downtime, your expenses won’t be so clear cut. Finally, you also need to think of classes, conferences and courses you are about to send your employees on.
In the end, we come to one of the most commonly misinterpreted terms in the entire business world ‘legal costs’. Here, a lot of people assume that legal costs solely comprise of the attorney fees you pay for the so-called lawyer work they do for your company. Here, however, you also have registration fees. The problem with overlooking legal costs is a fact that it is a major expense. In fact, an average legal cost for a startup usually goes anywhere between $5,000 and $20,000. One last thing, while lawyer fees may be quite situational, registration fees are fixed and non-negotiable.
From all of this, you might get just how easy it is for one to underestimate the cost of actually starting a business. Needless to say, seeing how most startups have to stand against all odds from the day one, it is transparent that forgetting about any of these issues might set a young company on a downward spiral. This kind of a bad start is not something most SMBs can ever recover from. This is also why you must do your research prior to making any business plans and worry about these issues during your fund-gathering stage.