The Hidden Costs of Your Growing Business
As your business grows, you become familiar with the typical expenses related to day-to-day operations. But what happens when unexpected costs threaten to send your business into the red? It’s important to forecast potential problems, as even the smallest costs can add up, especially as you grow. Below we highlight nine hidden costs that most businesses face when trying to expand—avoid these obstacles and set your business up for a successful future.
1. Employee turnover
Having stable employees return to your company year after year is a huge money saver. However, employee turnover is a real thing, especially in this changing workforce where most people switch jobs every four years. When an employee leaves your company, you’ll have to face the costs of unemployment and benefit claims, recruiting and the inevitable employee training when you do finally find the proper replacement.
To decrease employee turnover, do your best to promote employee happiness. Allow for growth within your company so high-value employees don’t have to look for opportunities elsewhere.
2. Business shrinkage
As much as we hate to admit it, business shrinkage happens. This occurs when you have a reduction in inventory due to admin errors, shoplifting or even employee theft. To prevent this from happening, you can implement certain loss prevention practices, such as training employees on better payroll and inventory practices as well as installing proper security measures.
3. Employee benefits and payroll taxes
When you hire an employee, your overall costs will be much more than their paid salary. You’ll have to consider employment taxes, potential workers’ compensation and other benefits like health insurance and retirement funds.
To lower these expenses you can either reduce the perks you’re paying out to your team or work with a good accountant to minimize tax expenses overall. However, cutting too many perks and benefits may lead to employee dissatisfaction, so keep that in mind.
4. Potential legal fees
Small businesses can be the victim of a lot of legal cases. If a situation does arise, it’s important that you’re protected. These fees will range from settlement costs to higher insurance rates after your case. Have a lawyer on retainer or, at the very least, have a lawyer look over all business documentation and processes—especially if you’re undergoing a large growth phase or a merger.
5. Office repairs and maintenance
If you own the location you’re doing business out of then you’ll need to consider general office maintenance costs that might arise. If you’re renting the building it’s important to go over the terms of your lease to see what maintenance fees you’re responsible for. Beyond simple building repairs, you may also need to purchase or replace office equipment to keep your business running smoothly.
To minimize these expenses it’s important to do routine maintenance both on your building and on your office equipment so you can avoid costly replacement fees. It’s also just as important to manage work order requests across your organization. If you need a simplified requestment management solution, check out our new tool Request Manager.
6. Building office culture
When you’re trying to build a strong office culture you’re going to have to purchase certain office items or give your employees certain perks. These can be incredibly pricey depending on your style of business. One way to avoid these fees up front is to focus on building internal company culture via your business processes and work expectations. Build out your physical office culture as your business grows and as space (and money) allow.
7. Facility operation fees
It costs money to run a business (big surprise!) and the cost of office space can add up fast. Beyond simply renting a space, you’re going to have to consider utilities and building operation costs, including things like more powerful internet and any company-wide software you may use.
To reduce utilities costs, you can upgrade to energy efficient lighting and institute office-wide mandates to reduce energy use. Along with this, make sure to audit your spending often to ensure you’re not overspending on things you don’t need and be willing to fork out the cash for certain programs, like ours, that help you streamline parts of your workflow.
8. Office space growth
Often, you may fail to consider the additional expenses that come with a larger workforce or a larger office. Depending on how many new employees you bring on, you may even have to expand to a larger space. To reduce company growth yet still remain effective, consider cultivating a remote work-culture to minimize in-office expenses or the need for expansion. Also, be sure that you’re taking advantage of the space you do have as effectively as possible by using space management software—leave no desk or office unused!
Running and growing a business is expensive, but by avoiding the unforeseen costs we mentioned above, you can minimize costs and ensure your business stays in the black.