Benjamin Franklin famously saidÂ there were only two things certain in life: death and taxes. For entrepreneurs, we can say itâ€™s business expenses and taxes. We know that managing business expenses is not the best part of running your business. However, there are ways to make anticipating expenses easier. Whether youâ€™re about to launch your business or have already hit the ground running, planning for these six expenses will help increase your chances for success.
“In business, nothing is certain except business expenses and taxes.”
-Business owners everywhere
1. Rent & Utilities
Expenses of this kind are likely a month to month responsibility. Regardless of the type of business you run, you need a space to work. Running your operation out of a garage or living room may decrease yourÂ overhead expenses significantly. However, even there you can incur some business expenses. If you’ve decided to literally not bring work home, then you’ll have to rent/lease a space for your business. This may be a building, parking lot, storage space, etc.
In addition to physical space, you need to cover the cost of utilities. Similar to a home, you’ll likely need electricity, gas, water and waste disposal.Â Depending on your type of business, your utilities may include:
– Water & sewage
– Waste management
– Phone and internet
– Wireless services
– Security system
Protecting your business and personal livelihood cannot be overstated. Therefore,Â Business Insurance may very well be an expense you won’t mind paying. It certainly has protected countless businesses from financial loss and helped keep the doors open for the foreseeable future. The cost of insuring a business varies by several factors: business type, size, region, assets, desired coverage and more. Adequate protection and reasonable pricesÂ can be found on Business Owners Policies through licensed Specialists.
Did You Know?
Employment Practices Liability Insurance (EPLI) and Cyber Insurance are increasing in demand. Employee lawsuits and the cost of data breaches can be a huge expense without insurance.
3. Marketing & Advertising
At the core of a business are its customers. Marketing and advertising are how you get those customers. If you run a business franchise, training and materials are likely provided to help you get you established.Â Marketing and advertising are expenses you’ll undertake to various degrees as your business grows. How much you spend here will be entirely up to you. A large but well-managed budget can allow your business to reach new heights. However, more modest budgets can also produce amazing results for your business. A well thought out strategy for email and social media have allowed many entrepreneurs to grow their customer base. A company will be comfortable with more substantial expenses in this areaÂ once they view them as investments because of its positive results. To get the most out of your dollars, keep your sales and marketing efforts hand in hand.
Paying anyone other than yourself will incur a cost. There are two main expenses related to payrollâ€”the cost of salary itself (wages, taxes, benefits, etc.) and payroll management.Â Job type, local and federal wage laws, your level of competitiveness, and other factors influence the first. When it comes to payroll management, you can fulfill payroll yourself, or you can outsourceÂ this task to free up your time. Outsourcing payroll management can bring added benefits. Professional, accredited, companies will bring you peace of mind. Also, they will likely offer other features you and your employees wouldn’t otherwise enjoy.
WhetherÂ payroll and its managementÂ will be handled internally or outsourced, do the math first. Consider pay frequency, volume (number of checks you’re cutting out), paper payments or direct deposit, and software costs to name the basics.
For many businesses, inventory is one of the largest expenses. If your company sells a service rather than a product, these costs may be substantially lower. However, count equipment and business property as inventory for tax and insurance purposes.
Manage your sales inventory well to maximize your business’s profitability and sustainability. According to many experts, you should only carry enough inventory asÂ you expect to sell in a short amount of time. Holding lots of stock over a long period of time incurs more upfront cost and cost of warehousing.Â Two of the giants of retail, Amazon, and Walmart, have mastered inventory management through the use of technology. You may not have the resources they do, but apply the gist of their strategy to your business.Â When it comes to inventory, technology and business intelligenceÂ are your friends.
Ideally, your business will be in a profitable greenâ€”where it can absorb expenses and investments without loans. However, loans are a common expense to businesses of all sizes and you can manage them successfully. Loans will add to your monthly expenses, so factor those payments in and plan accordingly. Accounting and banking professionals will help you make wise financial decisions for your business.
Anticipate Your Business Expenses
When it comes to personal and business expenses, the most important thing you can do is to expect them. Then, create a financial plan that will allow you to manageÂ those expenses well. Speak with other experienced business owners and read on various business topics. You’ll be much better suited to run a successful business as a result.
This content is offered for educational purposes only. No warranty or appropriateness for a specific purpose is expressed or implied.