Many people dream about starting their business and being their own boss. Only one small part of them have a real and achievable plan, others just want to run away from boring 9 to 5 corporate jobs. First-time entrepreneurs often underestimate costs their new company requires which leads to financial troubles and possible bankruptcy. In this article we listed some of the hidden costs entrepreneurs tend to overlook.
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Employee turnover
Having talented and steady workforce is a life saver for any small business entrepreneur. Unfortunately employees tend to leave their firms in order to find better conditions, higher salaries or positions among company’s ranks. When this happens entrepreneurs face several different costs, including:
Unemployment benefits claims- unemployment insurance costs will rise if entrepreneurs don’t contest their ex-employees benefits claims.
Recruiting replacements- recruiting process can be very difficult and tiresome and it also costs a lot of money, especially if it is done by outsourcing HR firm.
Training- new employees require long and difficult training. It can be internal or external and both kinds cost a lot. First one will take a lot supervisor’s time and the second will require fix rates that should be paid to licensed firms.
Legal fees
One time or another every entrepreneur is forced to settle some business dispute in court. The dispute can start from a simple copyright or patent infringement and it can turn into frivolous lawsuit that will hurt your company’s finances and reputation. There are plenty costs that are tied to this lawsuits and these are just some of them:
Attorney costs- if you don’t want your company to bankrupt over a minor patent infringement or employee dispute you need to hire an expensive attorney;
Settlement- best way to end a lawsuit is to reach a settlement, but this will also cost you a lot;
Higher insurance costs- your insurance rates will definitely increase, after you have been sued by bogus lawyers;
Lost opportunity- time you will spend on preparing your defense can be used in much more productive and profitable ways.
Maintenance and office equipment costs
Entrepreneurs usually count operating costs in their budget, but smaller maintenance and office equipment costs usually passed unnoticed, at least until the printer or the computer breaks down for the first time. Many companies that require lots of printed documents are closely following their monthly printing costs, and constantly trying to make their business more efficient. This is always recommendable, and cost-reevaluating concept should be applied for all equipment costs.
Professional help
Even in the first phases of your business development you will need professional help for various tasks. You will definitely need to hire some sort of tax lawyer or accountant to help your with your finances. Tax agencies won’t give you a free pass, which is why the whole accounting process should be done by professionals. Also you should be aware that tax laws defer from one country or state to another, which is why you need to hire local accountants. If you running your business in New South Wales, you should contact accountants form Sydney CBD, while if your company is registered in California hire accountants from LA, San Francisco, Oakland or some other city in CA.
Insurance
All smart business people know that insurance is very important for corporate level risk management. Other than regular insurance companies should choose policies that fit their business model in the best way. Some of the things your business should be insured from are: illnesses, negligence, work-related injuries etc. You should try to negotiate better deals with insurance agents. Try to tailor several policies and pay them in the bundle. Even if you succeed you should review your coverage at least once a year to see whether they meet your business needs.
Even with all these unexpected costs, entrepreneurship is still one of the most dynamic and rewarding ways to continue your career after you quit your corporate job. With minding every detail and hiring professional help when you are in doubt, you will be able to boost your company growth and continue its development even in the toughest moments of your entrepreneurship career.
