Starting a business is a fun, and sometimes very scary, adventure. And when you start on your first business journey, you will definitely not be one-hundred percent prepared for everything that comes your way.
One of the most important, and often surprising, aspects of running a business are the amount of expenses you will come across. One of the vital things for any business to do is to account for and receive the proper funding for all the expenses that may come your way. But before you can prepare for such expenses, you need to be aware of what they might be.
Here are 7 business expenses most people don't think about when first starting out:
1. Industry Association Fees
As a small business you’re definitely going to need experienced guidance and connections with the right people in your industry. The problem is there are typically annual fees that come with being a part of these top associations. But by being selective and being as involved as possible, this is money well spent. Shop around for the best associations possible, and be willing to put in effort to make this a worthwhile experience. Remember you only get as much out of something as you put into it.
2. Licenses or Permits
These vary by city and state, so be sure that you know exactly which permits and licenses you need to do business, and how often you will need to purchase them. Some places require you purchase them annually, some bi-annually. Find out the details, then factor these into your overall budget and this expense won’t ever sneak up on you.
3. Legal Fees
Unfortunately, legal fees are a part of every business. Even if you do not find yourself in any sort of legal trouble, you still need to be sure all your documents and contracts are in order when hiring employees or doing business with other companies. Just keep in mind that having solid contracts up front can actually save you money in the long run were there ever to be a legal issue.
4. Office Space
Before jumping straight into the largest office space you can find, consider why you need it. What type of office space do you actually need? Full-time? Part-time? Just a conference room every now and then? When you’re first getting started you may not need an expansive suite, 24/7. Instead of being overly ambitious about the space you need, take the time to really consider your best options and be sure to shop around. Finding flexible office space can help cut down on location expenses.
When thinking about office space, don’t forget to factor in utilities. Things like electricity, water, gas, phone, and Internet can really add up, especially if they are not initially considered. Keep in mind that there are ways you can try to lower your company’s energy bills, but be reasonable in your estimations for this particular cost.
6. Office Equipment
Now that you have an office with all the utilities you need, you are going to find yourself in need of office furniture, office supplies, and all kinds of other office equipment, including computers, printers, and software. This can really add up, especially if you are a growing business that begins outgrowing what you already have.
7. Hiring and Training
This may seem to be an obvious expense, but hiring a new employee is more than just scraping up the cost of their salary. It takes valuable time and money to fully train a new employee. It also takes equipment and extra office space. So before hiring a new employee, it is important to calculate the entire cost of that new employee so you’re not blindsided by the expense.
Life is full of surprises, so having a complete grasp on all the hidden expenses starting a business will bring may not be entirely possible. But don’t allow yourself to be surprised by these common hidden business expenses. Instead, with careful budgeting and planning, set your new company up for success.