Nobody starts a new business expecting it to be an easy ride, no matter what size it is. It’s easy to get caught up in the excitement of launching your new venture and seeing something that was once a dream take shape before your eyes. In that excitement, you can be forgiven for not noticing the hidden fees coming your way.
There’s no need for these costs to end up crippling your business before it gets a chance to find success. Here are some of the most common hidden costs and how to tackle them within your SME.
Office space
Like starting the business, it’s easy to get swept up in the rush of getting into your dream office. All business owners want to have a dedicated space for their company to grow. A place where they can decorate with the branding and style that represents their company ethos.
Unfortunately, hidden office costs can delay that dream for a lot longer. Signing a lease on an office space is a big investment. If you choose one too small you may end up outgrowing it before your contract ends. You could get a good deal on an office in a nice new building, only for the price to go up and you find yourself having to look for a new space. Then there are decoration considerations to make. It can be very costly to set up the kind of environment you want to work in.
As you work out how you expect your business to grow in the coming years, it’s important to find affordable office space. Find a cheap temp space you can use while your team is still small or take advantage of hotdesking in the early days. Likewise, keep the number of utilities you have to a minimum to save on the cost of maintaining them and moving them from office to office.
Meetings
When you break down the cost of meetings, you can quickly see how expensive they can be for SMEs. Beyond productivity lost spending time in the meeting, getting people together is one of the biggest hidden fees for a business looking to make inroads and grow.
It’s understandable not to want to hold client and shareholder meetings in your office space, as it can give the wrong impression about your business and distract the rest of your team. Yet, frequent meetings in coffee shops and restaurants can quickly rack up a hefty bill when you factor in all the extra costs that come with it.
You can tackle these fees by finding alternative ways to hold meetings. Use video chat services such as Skype or Google Hangouts to conduct your meetings remotely. Make use of project management tools like Trello to keep them continually updated. This is perfect for short update meetings and you don’t have to leave the office. When you do have to meet in person make sure you’re making the meeting as productive as possible, covering everything you need to.
Transport
When you start your office-based SME you might not initially realize how much time you’ll be spending out of the office. No matter what you do, the modern nature of many businesses requires more travel than ever for owners and employees.
Metting clients and investors can involve a lot of travel, sometimes out of town. This can impact a company’s bottom line, and see a huge amount of your budget going on transport costs. Whether your staff are driving or using public transport, costs and the price of managing those expenses will be significant. Likewise, if your business involves managing a group of drivers, your finance team can find themselves regularly lumped with a pile of travel expenses to work through.
There are many ways you can make life easier for both yourself and your accounts team. Investing in a fuel card, like the kind provided by iCompario, can help you save significant money on fuel per month and streamline your accounts department’s process by putting all car travel payments in one place.
Staff turnover
A lot of SME’s will experience heavy staff turnover in their early years. This is simply a consequence of the type of staff small businesses attract. Financing this routine of getting in new bodies can be a huge financial drain on your business.
Replacing a single member of staff using an external recruiter can cost a business up to $16,000. This is an incredible hidden fee for a business to have to pay on something that is ultimately going to slow down their productivity for the first couple of months. Add on the cost of training and introduction and you’re looking at a significant loss.
The key to saving on these costs is to try and keep people within the company for longer. This starts during the recruitment process. You need to show a clearer career progression plan for applicants that will make them want to stay within the company for longer. Also, when it comes time to hire, promote internally and save money on recruitment for a more valuable position. It will send a message to your staff that you’re willing to give them opportunities.
Payment delays
Your business suffers when clients decide to pay late. For them, you might just be another name on a list of monthly transfers. But for your SME, it can be the difference between staying above water for another month.
Not having money in your bank when it comes time to make payments of your own can incur massive heavy fees. If you end up with bouncing payments on your business account it can create conflicts to the people you need to pay.
To get around this issue, establish defined pay dates for all your clients and make sure they know exactly when to pay you each month. Small businesses don’t have the cash flow to deal with the issues that arise from late payments. You can also speak to your bank about getting an overdraft, which will help you cover the end of month payments of your own.
Final thoughts
We could never pull together a list of all the hidden costs your SME will have to deal with. From industry to industry there are multiple hidden costs that will strike when you least expect it. Use these solutions for specific hidden fees as inspiration for helping your business get through the next challenge.