Top 5 Things That Make Your Small Business Spend BigJune 19, 2017
There are dozens of hidden costs that come from running a small business but here is a quick list that could make or break your success. And don’t think that because your business is deemed “small” that your costs won’t be significant. In fact, many small businesses actually spend like they’re large businesses. Are you one of them?
- When overhead costs get out of hand
Between payroll, rent, and the cost of doing business, overhead can drown a small business before it gets a chance to sail. But the potential to match a large business in spending can happen without effort.
Employees are perhaps the most significant cost to any business owner, especially when you consider how healthcare has changed over the past few years. But rather than cutting back people, try factoring in things like utilities and rent that might be pushing your small business to spend like a large business.
Tanning salons, small manufacturers, and even restaurants use utilities like nobody’s business; the cost for their utilities would even make some larger corporations blush. Never underestimate what overhead can do for the bottom line of your top earnings. Heh, see what I did there?
- When you’re not insured
One of the biggest places for a small business to lose big dollars is in simply not being prepared. No matter what industry you’re in, the potential for accidents, damaged property, and legal oversights can abound.
Insurance is one of those things that small businesses avoid to their own peril. Most often, they don’t look into it until it’s too late. But by treating insurance as an asset for your company, you might be more inclined to see its value all the way to the bank.
The money you spend on coverage is like investing in a stock. The overall value is not in its immediate price, it’s in the long game. Finding a policy that’s right for you can be as simple as estimating what you’d be out of pocket if an accident occurred, then breaking that cost into a monthly payment that’s less than the cost of a few years of coverage. That way, no matter how many months you pay the fee, you know you’re still under the cost if that accident eventually happens.
The odds that your small business will need coverage is extremely high. Accidents happen, and the more business you do… Just like sales—it’s a numbers game. Paying to insure your small business is actually a positive way that you can spend like a big business.
- When customer acquisition outpaces sales
Let’s face it: none of us would be in business if it weren’t for our customers. But getting those customers can sometimes take more than first expected. Between paying your sales commissions, upgrading your CRM software, and pulling the trigger on a marketing campaign, your business could be spending at an alarming rate.
The rub of customer acquisition is that curbing these costs can come at a price. After all, with no sales come no new clients. And without marketing, no one knows you’re out there. Try to maintain a balance sheet to justify your expenses in this area. Even though it’s a numbers game don’t be afraid to pull the plug if those numbers just aren’t adding up.
- Not paying attention to fees
Countless costs for everything from vendor fees, taxes, and even legal or regulatory fees can be like death by a thousand cuts for a small business. Make sure to read the fine print and calculate any fees into the overall cost of a project to avoid getting caught in this snare.
- Spending time on peripheral things
Time is a treasure with many robbers—or so the saying goes. It’s the same with business. Time spent working on something that you could outsource for less, or too much time between client projects (like with seasonal trends, or an empty funnel) can often wear down a small business in a big way.
Along with staying in-house when tasks aren’t your wheelhouse, there is another way small businesses can lose out on time: lack of productivity. You may be a small business on paper, but if you lumber toward goals like a big business, you lose out on that nimble edge that small businesses are famous for. Decide, implement, and profit.Tags: business spending, hidden small business costs, small business, small business insurance
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This post was written by SMB Insurance