Many people dream of being an entrepreneur but don’t know the financial sacrifices associated with building a successful business. No matter the size of their companies, business owners must pay extra expenses and fees to keep their businesses running. This dream can become a nightmare if you don’t have the financial resources to keep the doors open.
The first thing a future entrepreneur should do is create a detailed business plan that outlines the budget for running the business. This budget should include day-to-day expenses, such as labor costs, utilities, and insurance. Explore the hidden expenses of running a small business so that you can create an accurate budget.
Shipping Costs
You may feel inclined to enter the global market if you’re an aspiring retailer. The shipping process can be intimidating, especially since you have the option to transport your goods in many ways. You will need to weigh the pros and cons of faster shipping methods like air freight over ocean freight or full trucking.
But it’s not the thought of shipping mishaps that makes most business owners nervous—it’s the cost of shipping. Shipping fees you can expect include:
- Packaging, boxes, tape, stickers
- Labor for sending the items
- Carrier costs
- Export/import fees
Permits and Licenses
Depending on your business’s location, you may need a permit and license to do business in your community. These permits are rarely one-time expenses. You may need to renew these licenses and permits every year or two, so it’s best to set aside money for dues. If your community has a local chamber of commerce, you should save money for membership fees and participation expenses.
Office Space and Utilities
A home office can work for many small businesses, but it’s important to know the expenses, fees, and regulations associated with investing in an office space. Before renting or buying a property, consider how much space you need today and what you will need when your business expands.
Utility costs can also hurt your budget, depending on how much you use your space. Look into energy audit programs that help improve your business’s energy efficiency and make your area more sustainable.
Business Insurance
Acquiring business insurance is one of the most forgotten responsibilities, and it’s a hidden expense of running a small business. When starting out, you may not need to spend much on insurance. Still, you will need general small business insurance, liability insurance, workers’ compensation insurance, property insurance, and errors and omissions insurance.
What kinds of coverage you need vary based on numerous factors, such as the type of business you own, the size of your business, location, revenue, and more. It’s always best to factor in your insurance before making any other financial decisions.
