The Hidden Costs That Must Be Noted For Any New Business
Thursday, October 25, 2018, 6:00 PM | Leave Comment
Whenever a new business idea is mooted, it would be fair to say that most people mull over the “stereotypical” costs.
These are usually the so-called headline-grabbers; the things like premises, marketing and so on.
Unfortunately, in and amongst these big costs are some hidden ones that are often forgotten about.
This is what today’s article is going to focus on, as we take a look at the hidden costs that any new business owner should be looking to stay on top of.
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Licenses
Like some of the other points we will look at today, this first one is going to depend a lot on the industry you are involved in. Fortunately, licenses aren’t applicable across the board, but in some sectors, you require them from the very start.
Of course, the most obvious type of licenses involves gambling and alcohol. However, the net can span much wider than this, and if we were to look at licenses from a slightly different perspective it might even cover membership to professional groups related to your industry. This might be something that isn’t necessarily a legal requirement, but it might be necessary to give your business the reputation it needs to succeed.
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Indemnity insurance
Fortunately, this isn’t something that is applicable in every industry, but indemnity insurance is something that is often forgotten about yet is absolutely crucial.
Mistakes can happen, and in some industries, they can end being more costly than others. One can look at medical indemnity from Incision to see an example of the sort of protection businesses can receive. Construction is also another industry, where indemnity insurance is common as serious accidents are much more likely to occur.
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Employee costs
At this point, we’re most certainly not just referring to salaries; this is just the tip of the iceberg. Nowadays, companies are responsible for a whole host of costs in relation to their employees. It can range from pensions (where the requirements are constantly getting tougher), all the way to national insurance contributions. In short, if you are offering a job position with a salary of $20,000, don’t for a minute think that this is the actual amount you will be paying each year. In reality, it will be much more.
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Payment delays
If you have already researched the process of starting a new business, you’ll probably have already found out about cash flow and how this can be one of the biggest killers of a business during its initial years. Sure, they might be doing everything right in securing clients, but when it comes to fulfilling these orders they are met with huge costs that their bank balance just isn’t able to cover. This is a typical cash flow problem.
Of course, steps need to be taken to ensure that these payment delays aren’t occurring. In the early days you should look to have a backup plan as well; a pot of money that will secure you if things do start to get slow.
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