So, you’ve decided to get out of the rat race and hop on your entrepreneurial journey – congratulations! Now you have to get down to the nitty-gritty and know exactly what it takes to make it profitable. which expenses businesses have to keep an eye on?
One of the most important things you’ll have to consider when starting any business is your operating costs. These will not only dictate how much more money you’ll need to run your business but will also affect your margins.
This is why it’s very important to know what these expenses are before you start. Here are some of the major expenses most businesses have to consider.
Wages and Benefits
Unless you’re moving as a one-person army, you’ll have to factor in wages and benefits. One way to evaluate the average salary for different positions is to use a tool like Glassdoor’s salary index. Benefits could also add a lot to your costs depending on what your benefits packages offer. Make sure that you only hire the people you need and work with subcontractors when possible.
Office Supplies and Utilities
You’ll also have to set money aside to keep the lights on. You’ll have to consider things like the internet, phone, water, gas, electricity, as well as some basic office supplies.
If you want to get the best deal on utilities, you can use a tool like Utility Bidder to compare business gas prices across multiple providers. You’ll be surprised at how rates can fluctuate. This will give you a bit more room to breathe and spend on more important functions.
Rent is also something you’ll have to consider if you’re using office space. However, there are some things you can do there to save. For instance, you could sublease your office space to another company. See how much space you’ll need, and see if the option could work for you.
Equipment is also something you’ll have to consider. You can either decide to buy equipment brand-new, rent it, or buy used. In these cases, we would encourage you to think twice about buying the latest equipment. You may be able to get by with an older generation machine that will give you all the performance you need. Also, consider renting major pieces of equipment that you’ll only use periodically.
Theft is another thing you’ll have to factor in. There’s also the threat of cyberattacks. That’s why you have to make sure that your systems and equipment are secure at all times. That could mean having security on the grounds and securing important pieces of equipment or systems with advanced identification methods, such as biometric data coupled with password identification, for instance. Assess the value of your data and the costs that loss would incur when making your decisions.
These are only some of the major expenses you’ll have to deal with when running a business. So, make sure that you know exactly how much you can expect to spend, and make sure that you build a solid budget and stick to it.