Are you looking to take advantage of the American Dream? Going from rags to riches may have been possible a century ago, but it’s a little more difficult today. Starting your own small business will require a bit of that green stuff to get you up and running. What many don’t tell you when pitching the idea of starting your very own business are the hidden costs. To better prepare you for your future, we outline the most common hidden costs first-time business owners face when starting their own company.
As you begin your business adventures, you’re going to need a boatload of supplies. Whether you’re opening a small cafe or a local hardware shop, you need to invest in the proper tools and equipment to run your company. To get an idea of the numerous expenses you’ll need to consider and ways to tackle these costs, keep scrolling!
- If your town has ten pizza shops, it’s probably not the best to open yet another one. Conducting market research to identify consumer’s needs will allow you to find a gap in supply and fill that demand. Bring your business to life with market research apps to make your business stand out among the crowd.
- Technology can be expensive, but it will save you time and money in the long run. Finding business software specific to your job can help you streamline operations and keep track of projects. For example, equip your HVAC company with plumbing business software by Housecall Pro or this plumbing software to consolidate payments and grow your business
- A huge hassle when opening a business is keeping Uncle Sam happy. From understanding your finances to keeping your building up to code, opening a business can become expensive. You can hire local professionals, often at a cheaper cost, through TaskRabbit to help you take care of legal and accounting work
- Stocking your new business is another upfront expense that can put a dent in your wallet. As an example, you can shop from wholesale dealers to fill your restaurant is a cheaper way to make sure you have enough silverware and plates
Fastest Way to Get Online Business Loan Offers In Minutes
We get it. Understanding taxes is a headache no one wants to deal with. When you open your small business, many entrepreneurs don’t realize you most likely won’t see profits until a few years down the line. And, just because you aren’t making much money, doesn’t mean Big Brother isn’t watching. Regardless of how little or how much you make, you will still have to pay taxes to the IRS as a small business owner or if you’re self-employed.
The average American doesn’t have $30,000 just hanging out in their bank account. Mortgage payments, college tuitions, car bills— you name it. These expenses take most of our income away from us. While all startups cost a different amount depending on a multitude of factors, you’ll most likely need a business loan. A hidden cost that comes with business loans is the interest rate. If you have a poor credit score, you will most likely have strict terms and conditions on your loan (if you get approved at all). Because of this, you’ll be spending more than you can probably handle on interest rates, driving you further into debt. Before you consider financing for a business, improve your credit score to get a more favorable plan down the road.
Insurance and Employee Benefits
These two expenses can cut deep into your finances. If you own a company that sells expensive products, the last thing you want is to face a financial emergency from a fire or flood damaging your inventory. Business insurance is something to consider as you open your business. You may not need it right away, but it’s something to invest in just in case the worst scenario possible occurs. Additionally, other insurances you’ll need to invest in include worker’s compensation insurance, cyber insurance, and liability insurance!
In order to keep your business growing, you’ll need employees who love coming to work every day. Offering them a proper benefits package will not only incentivize them, but it will also increase productivity and cash flow! If you don’t have enough money in the bank to hire an HR representative, cloud-based companies like Zenefits help small businesses manage their human resources!
Wrapping It All Up
Starting your business to fulfill a lifelong dream or simply become your own boss will create a life you are proud of. But, don’t undermine the difficulties that come your way as you begin your new journey. Hidden costs such as insurance, expenses, and taxes should always be accounted for so you don’t end up bankrupt.