More Hidden Costs of Running a Small Business
So, you thought you had it all covered. You budgeted wisely, and your small business is up and running. There were even a few surprise costs that emerged, but you rolled with the punches. Now it is time to learn that a small business owner must always remain vigilant because running one is never without hidden costs. Here are a few more:
Retail shrinkage costs U.S. retailers roughly $32 billion per year according to an article in Fortune magazine. That is approximately 1.4 percent of their total sales. So what is shrinkage? Basically, it is a loss of inventory. It occurs between its purchase from the supplier and its purchase by your customer. Causes include short shipments from a vendor, picking errors, damaged goods and theft.
2. Payment Delays
Business is always good when everyone pays on time. That is in a perfect world. If you have fulfilled demand, but have not received payment, the books will suffer. As long as you need to cover costs, delayed payments will hurt. You may end up forced to decide which bills to pay. Even with this heads-up, this is a blow to your bottom line that is almost always impossible to predict. A customer might forget to sign a check. A holiday might cause a payment to post later than you expected. Be prepared for the unexpected.
Time is money. You may have dismissed those words as cliché in the past, but you run a business now. If you choose to waste time and energy on a task that could easily be delegated to another employee, it will cost you. Putting out fires and balancing books will get in the way of seeking new revenue streams.
4. Legal and Accounting Fees.
This is a double-edged sword, for sure. On one hand, legal and accounting fees can run you thousands of dollars annually. On the other, those lawyers and accountants can save you both money and time. To a degree, you can budget this. However, running a business will involve its fair share of red tape that will require a legal professional to untangle. You will need help translating tax codes or maintaining accurate payment and inventory records. That is where accounting specialists come in.
5. Credit Card Fees
Now, you will finally understand those minimums that so many local vendors insist on when you pay with a credit card. They probably pay about 3 percent of total charges in vendor fees. Now, so will you. What about your own credit cards? Be very careful about using credit to finance expenses or provide cash flow. This can lead to unmanageable debt, high interest rates and increased reliance on credit.
If you have any questions regarding the operation of a business and its legal needs, contact this office for an appointment.
The Law Office of H. Benjamin Sharlin LLC
is owned and operated by H. Benjamin Sharlin and serves all of Mercer County, New Jersey and the surrounding areas. Mr. Sharlin is a bilingual Spanish-speaking attorney who vigorously represents the interests of all his clients.
Call (609) 585-0606 or click the button below to schedule an appointment