Improper money management is one of the most common problems for small businesses. It’s difficult to accurately predict all your expenses, particularly if you’re a first-time entrepreneur or working in a new industry. Proper financial planning can easily make the difference between business success and a bankrupt startup. Make sure you plan for these easily overlooked expenses to safeguard against financial failure.
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Free advertising will only get you so far. If you have a social media expert on your team, you may be able to stretch low-cost marketing further than some, but you should still budget for paid advertising campaigns. Facebook’s changing algorithms make it increasingly important to pay for exposure. Other sites like Instagram are hosting sponsored posts now as well. Accept early on that you can’t spread the word about your company without a financial investment in your marketing efforts.
Employee Training and Raises
While you’ve probably allocated funds for employee payroll already, you may have forgotten about the anticipated raises and bonuses that typically occur once a year. When you’re working on long-term financial projections, it’s essential that you account for raises and other financial incentives. If you’re not providing your employees with regular pay raises, you may experience higher turnover.
There are many ways to minimize employee turnover, but even the best companies will lose workers from time to time. It’s therefore important to include employee training in your budget. This may include training manuals or videos, learning materials, and extra hours. Some companies pay employees a premium for the hours when they’re training new hires, which is another expense to account for.
Whether you’re in a high-tech industry, or simply using your office computer for email, word processing, and other basic functions, your technology won’t hold out forever. Invest in laptops from a reputable company like Lenovo from the beginning to ensure the longest lifespan for your equipment, but don’t neglect to include upgrades, repairs, and replacements in your budget as well. Get more information about your options now so you can plan accordingly for the future.
Building a small business often requires time on the road, but business travel can get expensive. If your business plan includes sending employees to distant locations for sales calls, you’ll need to factor in travel expenses. If you’re wining and dining your potential clients, this is another business expense to account for.
Attending conventions and trade shows is a valuable way to spread the word about your company, but attendance comes with a long list of expenses. You’ll need to invest in an eye-catching trade show display with features like a table cloth, tabletop display, banners, and pop-up displays. You’ll also need giveaway items to draw attendees to your table. Other expenses include registration fees, shipping for your trade show display and materials, and hotel stays, meals, and air fare for sales reps who plan to attend.
Licenses and Permits
Every business has different licensing requirements, so it’s important to research the specific permits and licensure necessary for your industry. Federal business licenses are required for those in heavily regulated industries such as pharmaceutical manufacturing, firearm sales, and alcohol manufacturing. State licenses apply to a diverse range of professionals, including cosmetologists, building contractors, and security guards. You may need to obtain local licensure for some businesses as well.
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Make sure you consider license expiration and renewal dates, and plan for any recurring fees associated with maintaining the necessary permits and licenses. Many of these are annual occurrences that are easily forgotten if you don’t keep track of them.
Running a successful small business requires a significant investment of both time and money. When you’re budgeting for your weekly, monthly, and annual expenses, it’s important to remember these easily overlooked areas. Include them in your financial planning now and you can adjust all other operations to ensure that your financial situation is as secure as possible. You can’t predict every expense that your company will face, but you can account for many of them when you take a detail-oriented approach with ample long-term projections.
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