Often some of the costs are left out because they are small and seem insignificant. Hidden costs can pile up like an iceberg and sink your business like the Titanic. They can make you think, that your business is more profitable than it actually is. What are these costs? We have collected 5 hidden cost categories, which could help you find your iceberg and break it.
Internet, mobile phone, licenses, web hosting and the list goes on. Most of these subscriptions are mandatory to run your business effectively. Even though some of these subscriptions seem like small monthly or yearly fees, eventually they sum up into thousands of euros. Take control over these fees by limiting them to a budget. You might not need certain subscriptions anymore, yet the monthly fee is automatically taken from your bank account. As for mobile services, choose a subscription for a group of people, instead of many individual ones.
If you’re selling a product physically at a store or online, credit card fees are inevitable. At first they may seem small, however, the more you would sell, the more it will affect your budget. Paying with a credit card is probably the most common and convenient form of payment and cannot be eliminated. What can you do? Firstly, prior making any agreements, carefully read their terms. There could be hidden fees for minimum process requirements, higher rates for premium cards and similar extra fees. Get familiar with their terms and estimate the additional fees in your monthly budget.
This is very applicable, if your business provides a service. Thousands of euros in Malta are held up in unpaid invoices. This can be especially crucial, if you’re just now starting out and need a healthy cash flow. Certain clients could make you wait months and even more than a year. If the client is resistant to pay, it will resort into court and a time consuming chase. Measures can be taken to prevent late invoice paying, for example, asking for a deposit, having an efficient accounting system, keeping a follow-up call diary etc. This article could be very helpful if your business tends to struggle with unpaid invoices.
Employees are an essential part to any business, however, their expenses can strike your company at the worst time possible. There’s plenty of other payments besides salary, for example, training, certifications and conferences. Additionally, there’s also public holidays, vacation days and sick leave. The employees need kitchen essentials, toilet tissue, soap and similar basic necessities. These costs serve a purpose for a healthy work environment. Don’t forget to plan these expenses in your budget, as your employees represent your brand and happy employees can make the difference between a business and a great business.
Even though time is not a direct expense to put in the accounting books, it is one of the highest expenses you have to count on. The saying ”time is money” is very suitable in this case- as a company leader, you want to be involved in each part of the business, however, all the time spent in management can represent lost opportunity and revenue. Additionally, there’s an emotional cost, which is why many fail. Clear some of the responsibility by automating certain processes, for example, consider a point of sale system for your shop or restaurant.
It’s clear that most of these costs are inevitable and serve a greater purpose to improve and grow your business. Planning a budget with room for unexpected expenses is the best plan for the company to avoid hitting the iceberg.
*Thank you pexels.com for the photos.