Business

5 Hidden Costs That Effect Every Company

Everyone understands that running a business is expensive. What most people don’t know is just how expensive it is to be successful. Owning a company is a good way to make money, but only if you’ve got the cash in the first place. If you don’t, the hidden costs of business will add up and cripple the firm, causing it to become another statistic. Logic dictates that before you sign on the dotted line, you should know what is lurking under the mattress. Bearing that in mind, here are the skeletons in every firm’s closet.

Employee Turnover

Some people stay with their employer for decades. For most, though, that isn’t an option because they like new challenges. Plus, life gets boring for them when they stay too long. It’s important to let them go – it’s the law – but it does cost a fortune when it happens. To begin with, there is a chance you will have to pay off the remainder of the contract. Then, you need to spend money on the recruitment process and securing a replacement. Finally, there is the money you have to devote to training to get them up to scratch.

Overheads

No one thinks about overheads when they start a business, yet it can lead to your downfall. Business expenses build up, so much so they can account for thousands of dollars of the budget. Bills such as gas and electric are impossible to eradicate, as are expenses like fuel for shipping. It is possible to cut them with a new energy supplier and a trucking cost per mile calculator, which are handy tools. But, you need to include these costs in your calculations in the first place as they can cause havoc in the future.

Legal Fees

Sorry to be the bearer of bad news, but you will get sued. Rival firms use frivolous lawsuits all the time to attack their competitors, and it works. Not only does the suit take up time and energy, but it also costs a fortune. Even if the court throws it out at the first hearing, you still have to pay your attorneys and the court’s legal fees. There is no way to plan for this, and all you can do is wait and hope it doesn’t happen. When it does, just pray you have the money to stay out of the red.

Shrinkage

What is shrinkage, you ask? It is what happens as a result of employee theft and administrative errors. Unfortunately, workers steal and business tech makes mistakes – it’s an occupational hazard. The thing is that these actions cause you to lose money. A workforce with sticky fingers, for example, chips away at the inventory, which means you have less than before. In turn, that means you have to buy more stock, and that costs money. If it happens all the time, it can set companies back tens of thousands of dollars. So, it pays to keep an eye out for shifty people.

Repairs & Replacements

Things break, and you can’t do much to stop it from happening. The only option is to find a solution or find a replacement, but you need to act ASAP. The longer the business is out of action, the more money it will lose. A tip that might come in handy – repair before you replace. Repairing, when done right, is cheaper.

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elliott

elliott

Ive been blogging now for 5 years on various sites for the love of knowledge share. I decided to start my own blog a few years back to share everything from tech to business news. Follow me on twitter for more.