Pursuing and running a small business comes with a lot of costs, and some of those costs might be less obvious than others. Of course, you expect to pay for supplies and to pay your employees. But running a business is as complex as it is demanding, and there are many costs that may not be as apparent.
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Plus, with the unique situation we are experiencing due to the pandemic, there is more to think about than ever. With a patchwork of restrictions slowly being lifted, business owners also have to navigate how to reopen their doors.
For this article, we gathered input from small business experts about some of the hidden costs of running a small business today. What costs are unexpected and how does the pandemic affect things? Read on to find out.
Turnover
While it isn’t easy to measure in dollars and cents, turnover is always one of the biggest hidden costs of doing business. The restaurant industry is feeling this in particular right now as it has had difficulty re-hiring much of the workforce it lost due to the pandemic.
But the restaurant industry isn’t the only one that struggles with turnover. Andrew Latham, certified personal finance counselor at SuperMoney.com, offered his input on turnover. “On average, losing an employee costs at least a fifth of their annual income, and this doesn’t include intangible costs that can be even more costly to small businesses, such as damage to morale, brain drain and lost skills.”
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Licensing and Insurance
Licensing and insurance may not be the most interesting topics for everyone, but they are very important nonetheless. And they can also be quite costly for your business depending on the nature of what you do. “Some small businesses have significant costs associated with licenses required to operate,” says Matt Sotir of Equitable Advisors. “In addition to these fees there may be credentialing requirements as well. Think of opening a barbershop, you need state and local business licenses as well as formal training at a barber school and probably a requirement to renew this license and training over time.”
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Financing
Just about every business needs capital to continue to grow. What people often don’t think about, though, is that the financing itself can be a hidden cost. “A large number of business owners tend to view investment capital as a single unchargeable unit,” says Alina Clark, co-founder at cocodoc.com. “The truth is, even…
Read More: The Hidden Costs of Running a Small Business