The Hidden Costs of Running Your Small Business
Being a small business owner is a dream many people work hard to achieve, but it often comes with a hard reality — especially now. The Great Recession has cost small businesses in the United States upwards of $2 trillion, and while much of the fault lies in a downshift in consumer spending, the truth is that business ownership is riddled with expenses. When the money isn’t flowing in readily and easily, hidden costs become much more important in a small business’s day-to-day operations and overall solvency. From legal fees to licensing to shipping costs that will continue to rise, here is a closer look at some of the shadowy expenses that may be threatening to run your business into the ground.
Shipping
Whether you regularly utilize international shipping or just worry yourself with keeping up with domestic pricing, shipping is an important and complex expenditure for most small businesses. Here are some tips to make sure that shipping fees don’t cost you more than they have to:
- Don’t guess. It takes effort and time, but doing appropriate research is essential to prevent your shipping costs from undercutting your bottom line, and because shipping will likely keep increasing in cost, the research you do will give you accurate records for making budgetary decisions about the future.
- Use the tools. Plenty of shipping companies provide a wide range of online tools on their websites. From calculating shipping costs to printing out necessary forms, utilizing the available tools will save you time and money.
- Communicate to your customers. Your shipping policies and pricing need to be easy to understand and access so that your customers know what they’re paying and why. Good communication also ensures you won’t have to pay out of pocket for something that was misunderstood.
Legal Services
Legal counsel is expensive, and while you can try to operate your business to avoid hiring a lawyer, you will likely encounter a tricky legal situation where expertise is necessary. If you find yourself in need of legal advice or assistance, take the time to research rates, and negotiate the cost upfront. Get recommendations from trusted sources, and if you can, try to trade services with a lawyer in your network.
Credit Card Fees
Credit card fees — whether you’re buying or selling — can really rack up. At first, it may seem like the 2 to 3 percent charge is reasonable, but that’s a consistent slice off your gross income every time a customer makes a purchase with plastic. Start paying attention in a different way: every time you look at the money you’re taking in over any given period of time, mentally adjust your figures to about 5 percent less so that you have a more realistic look at the money you’re actually bringing in.
Time is Money
When you work for yourself, it’s easy to forget that your time is always valuable. From the extra hours you will inevitably keep to the stress and worry you’ll find yourself occupied with, your time is something you need to honor and keep track of. To that end, whenever you do anything for your business, keep a log. Even though you may be required to do more than anyone else, you need to know just how much extra you’re doing, so that you can properly compensate yourself in the long run. As your business grows, you’ll need to know what will be required of the person and people you hire to do the work you’re finally able to delegate.
Industry Association Fees
Networks are important in business — especially if you’re new to the industry. Joining professional associations helps you gain access to people, services and potential customers, but industry associations come at a literal cost. Be careful about what you join and why since fees can cost hundreds of dollars. Make sure you can afford it, and make sure it will provide a real return on investment.
Social Security
For people who are employed by someone else, social security costs half as much as it does the small business owner. Make sure you plan to lose at least 15% of your gross every year so that when tax time comes, you aren’t surprised at your tax burden.
Running your own business is a great goal to have and meet. Keeping track of hidden costs is an essential way to keep yourself — and your business — up and running over the long haul.
About the Author: Jason Henderson is a contributing writer, who owns and operates his own printing business.
Share this:
Category: Business
