Unexpected Costs When Expanding Your Business
Whether you're selling online or offline, expanding your business can bring about unexpected costs. They don't have to creep up on you and catch you by surprise. See them coming with this thorough list of expenses you can expect.
A huge benefit to selling online is low overhead costs. That doesn't mean, however, you are excused from all expenses for your business. Check out common online costs associated with ecommerce below.
One of the fastest ways to expand digitally is with a well-designed, functional website. As the virtual face of your company, this is a critical investment. A good website can cost hundreds or thousands of dollars to build.
Additionally, site hosting, security, and maintenance costs should be an ongoing and permanent fixture in your budget. Remember that if your site goes down, you're going down with it!
Ultimately, your website will say a lot about your business. This is definitely an area of your business you don't want to cheap out on.
Once you've got a digital footprint, getting the word out is important. You may want to pay a specialist for search engine optimization (SEO) assistance. They will help your website rank in Google, Bing, and other search engines. SEO plays a huge role in how many people are able to find your business.
Another way to promote your business is through social media and search engine advertisements. While $5 will give you some bang for your buck on certain platforms, it can take quite an investment to make your mark.
When unexpected costs start adding up (like delivery and return shipping), 68% of shoppers are said to abandon their purchase. The takeaway? Be upfront about extra fees. You can also try adding them into your product/service cost or offering promotions like free shipping.
Run the math on your profit margins to see which is the best option for your business. Free delivery and return shipping aren't right for everyone but not disclosing it early can be equally as dangerous.
If your business has a physical presence, you should be prepared for a variety of additional expenses.
Location & Energy Costs
Do you need that fancy, downtown office? Rent for pricey retail space can add up. So can climate control, electricity, and utilities. Get an understanding of your budget and rate of growth before committing to a location you can't afford.
It can be tempting to be hopeful and believe the space will make you profitable, but it could just make you broke.
Whether you're moving into a new location or making use of an old one, your shop might be in need of a makeover. If so, over budget for your remodeling expenses.
A good rule of thumb is to expect to pay 25% more than you're quoted when all is said and done. Though you can always try to avoid overages all together by communicating thoroughly with your contractors – ask lots of questions, set a specific project scope, and get everything in writing.
Permits, Licensing, & Insurance
There's more to business properties than paying rent and building costs. Remodeling may require costly planning or construction permits. Other permits you might need include a new business license, food handlers certification, fire safety certificate, and sign permit to name a few.
You should also account for the application time and waiting period before approvals, not to mention the trips to your local city hall that these tasks require. Learn more about getting insurance and licenses.
Expenses for Every Business
Here are some common expenses every business should expect when they are looking to scale up.
While you may be relieved to have help, new employees are an expense. Hiring costs include job advertisements, interview time, salaries, onboarding, supplies, uniforms, and more.
Not to mention, welcoming employees with a great office culture can get pricey. Team outings, health and wellness benefits, and more may need to be factored into your employee budget, too.
New Equipment & Equipment Breakdowns
More likely than not, you need equipment to sell your product or service. This may mean purchasing software, tools, and other essentials specific to your industry. A bakery can't function without an oven, after all.
Keep a constant place in your budget for these types of expenses. Plan for regular equipment maintenance as well as disasters. An out-of-order restroom can result in many anxious customers and staff. You'll want to have capital available to take care of these issues, quick.
Not all expenses are bad! When a big opportunity arises, make sure you can financially afford to seize the moment. This could be a newly available piece of property or a limited time offer to purchase bulk inventory at a steep discount.
These surprises can be huge breakthroughs for your business – if only you can take advantage.
How to Prepare
No matter your business, the following questions can help frame the beginning of your saving and spending strategies.
Do I need a custom-built website right now?
Many small to mid-sized businesses can get away with running a template-based website. If your business hasn't outgrown a template-service, you can save big by avoiding a custom-built site for now.
Should I ramp up marketing?
Inexpensive marketing efforts like blogs and good customer service are great things to work on continuously. Maintaining these forms of free advertising while you save a budget for paid online marketing is a great way to build a brand presence at your own pace.
Will I need to hire new employees?
Being able to pay them and provide the best work environment is crucial. Only hire new employees when the improvement in workflow will greatly outweigh the costs of hiring.
How old or reliable is my equipment?
You may be able to stretch out the life of your equipment for a little while, but you should prepare for the moment it crashes. If upgrading your equipment will result in a huge increase in productivity, it might be worth investing sooner rather than later.
When you are ready to ramp up business, make sure you order the right amount of labels for your job. OnlineLabels.com offers no minimum order sizes on most standard items and quantity price breaks. Let us work with you to help your business grow!
Need help funding growth? Check out our tips on funding your small business.