Getting into business for yourself is a wonderful adventure as you may leave a corporate world behind. But do you know what the hidden costs you will really need to do business?
Planning, in the beginning, will save you a lot of aggravation and money as you start and grow your new business.
The Actual Cost of Doing Business
They say taxes are always a must. Small businesses pay local and national taxes on money coming in and money going out! Save around 35% of your incoming dollars for business taxes.
Hence, the cost of being self-employed is high, but worth the freedom every day!
Business insurance protects a business from any lawsuit it may face.
But, by having the correct business insurance, you can be assured issues are taken care of by insurance if and when you have any.
Shop around for this type of insurance and ask a lot of questions. How much insurance do you actually need? Be careful not to cut too many corners because you will really need it when you need insurance!
Heat in the winter and cooling in the summer are costs to consider. Plan ahead and budget a little higher than you anticipate for inflation.
Gas – If you travel for your business the price of gas can have a big impact on your costs. Be sure to keep that expense planned out with extra dollars available.
These costs quickly add up. Things like copy paper, pens, staples, and ven the cost for business cards, checks, etc. quickly pile up. Don’t forget computer costs.
How to Lower the Hidden Cost of Doing Business
The only way is to hire a reputable accountant who can help you offset some of your taxable income. An accountant can save you a lot of money and point you in the right direction with your business.
They can help direct you to what type of business to form or changes to make. Does an LLC work for you, or do you need to form a corporation?
If you are a start-up, you may have other deductions you can use for your taxes. Be sure to read up on which deductions you can use for your start-up!
Next, shop around for your business insurance rates, as they may vary from one company to another. Not only that, but figure out how much coverage you need. Then, get a second opinion on that.
Finally, not all stores are alike in their pricing! Oftentimes you can find better deals online but for example, if you need an office chair, I recommend sitting in one first.
Find a local store that carries the supplies or try to shop online for lower prices. Be sure that shipping costs don’t cost more than the price of gas to visit a local store.
If you live in a more remote area you may have to shop online for your business supplies. Plan ahead if so!
What Other Business Expenses Can You Lower?
Many business owners may not realize they need at least 3-10% of their annual sales for marketing their business. When first starting, you may need to up those estimates. But how can marketing expenses be lowered?
Instead of spending lots of dollars on Facebook and Google, use native marketing. Native marketing is less expensive, saves you a lot of time, and increases your reach online.
What Is Native Marketing You Ask?
It is advertising but matches the look and feel and function of the media format in which the ads appear. These native ads are found in social media feeds or recommended content on a web page. They do not LOOK like ads do.
Native ads blend into the format where you place them.
You can start with as little as $100 a month to begin advertising with native ads. Companies like Taboola and Sharethrough offer programs you can purchase online.
Use Email Marketing
Build up your email marketing by building your email list. If you are a small retail store, ask people to fill out their email addresses for a free offer.
If you are an online retailer, you can do the same. But, you may need to incentivize people to sign up for emails. Offer something valuable in exchange for an email address!
Many consumers use email to shop when those special offers enter their inboxes. But, be careful not to send too many or too few emails for your business. Add some personality.
Use a Business Expense Calculator to Lower the Hidden Cost of Doing Business
Companies like Paycheck offer a business expense calculator online that tracks your expenses to save you both time and money. You can search online for others as well.
Some of these expense calculators are right on your mobile device as an app.
Having one of these calculators to help track your expenses will make you see exactly where you are spending your money.
Maximize Your Skills and Those That Work For You
By maximizing everyone’s skills, you can get more done with less. You will save time and money by getting more in less time. Using your people’s skills to the fullest also cuts down the hours you pay for help for your business.
Not only that, but you will save yourself time.
Re-Evaluate and Change When Necessary
Every few months, look over your expenses and see which you can lower. Go through each line item and see if these small business expenses are a must, worth it, or if you can cut anything out.
As the old saying goes, “The definition of insanity is doing the same thing over and over again, but expecting different results.”
How are you lowering business expenses to survive in your small business? We’d love to know more in the comments below! Thank you.