Don’t Damage Your Business Before It Can Thrive

Starting and growing a business can be a thrilling experience, however, one of the most common threats to both new and smaller established business ventures is restricting them before they get a chance to grow.

It’s imperative to give your business the fighting chance it deserves to become established, and for this, you need to be ready for the complex, winding road ahead. In this post, we explore some of the most common factors you should consider before starting up a business or new commercial venture.

Regular outgoings

Start by staying on top of the permit, licensing and due fees by being aware of any renewal dates and their associated costs. Waspbarcode.com states that setting aside money for membership dues, including known industry and professional groups, is a great way of keeping yourself up-to-date with the latest news while providing your business with exposure.

As a bonus, many of these organisations also provide members with various discounts on insurance, loans, credit card fees, supplies, and training. If membership is unaffordable for you, attending events for a fee is also possible. Be selective in your choice of memberships otherwise bills can be higher than you might initially expect.

In an article written by U.S. News, Mike Scanlin, CEO of borntosell.com states:

"The first year I was self-employed, I discovered I had to pay self-employment tax. It's not a small number – over 8 percent of my adjusted gross income. Yikes. Nasty surprise".

Entrepreneurs are often negatively impacted by taxes. You can imagine a lower cash flow relates to lower tax payments, however, payments will still be expected regardless of active cash flow levels, which can be damaging when your business isn’t yet delivering the repeated income required for self-sufficiency. Early research into what expenses you could be faced with can never hurt, and in fact is an important aspect of the business planning stages.

Negotiating with insurance providers can be an effective way of saving money. If you maintain a good record with your insurance providers, they will feel encouraged to provide you with potentially lower rates or offers comparable to introductory deals. It is also important to regularly review your coverage to see that it still meets the needs of your business as it expands and changes course.

Depending on the card a customer uses, you can often expect to pay around 3 percent in fees. You can avoid this by offering discounts for cash payments or adding the charge as part of your fee. From a business standpoint relying on credit for expenses and cash flow holds a high risk of continued reliance on these accounts alongside unmanageable debt if bills don’t get paid in full each month. Explore other finance opportunities such as grants or, if it is necessary, loans from credit unions and micro-lenders offering lower rates than credit cards.

Office space and equipment

For a small business start-up, a home office is more affordable. If you are unsure of where your business will be in the future - temporary office spaces, which often include office equipment, utilities, internet access, receptionist service and a shared meeting space, would be a reasonable place to start. For your own office space look for providers offering options like flex-pay, competitive rates or budget billing and energy audit programs to help improve the energy efficiency of your business.

Factor in for all the equipment your business will need including office and commercial furniture (either hiring or buying depending on your price points and budget assigned); desks, chairs, computers, printers, copier etc. If it meets all the requirements, there is nothing wrong with second-hand or discounted equipment, as this can always be refined at a later date. Also, it is worth noting that computer equipment will require regular replacement/upgrading according to the lifespan and typical degradation period.

People

As you would expect your employees are a vital aspect of your business growth and progress, and it is important they aren’t neglected (this is not just about financial oversight). On average, recruiting a new employee will cost around one-fifth of a worker’s salary so maintaining the happiness of good and reliable employees is far more beneficial. You can avoid some of the common staff pitfalls like excessive employee turnover with things as simple as keeping a clean environment and factoring for a relaxed dress code, alongside schedule and office perks (small gestures can go a long way).

Make sure to delegate tasks to other employees when you can. Taking care of your own well-being is also vital to running your business, and often overlooked due to myriad commitments and often fragmented focus areas.

Professional services matter. Legal and accounting fees can be expensive but having confidence that you have professional support behind you can make things far easier and save you money in the long run. Less sensitive tasks can also be completed by and billed to your lawyers’ and legal support staff which could save you in fees. Some professionals and universities also offer discounted rates which are worth investigating.

Unexpected costs

Shrinkage is a loss of inventory between purchase from the supplier and then by your customer. It can be caused by short shipments from a vendor, picking errors, damaged goods or theft. A barcode inventory management system allows maintenance of real-time data on all stock or products minimising the risk of shrinkage.

Ensure you are aware of and in line with legal obligations to vendors, employees, and customers. Internal and external policies should regularly be enforced but keeping an emergency budget just in case mistakes arise that result in government fines is helpful.

Delays in payment most likely will occur. Always ensure that all your outgoings are covered as they must always be paid. It can be that customers forget to mail a check, or your bank can hold larger payments. If customers do not pay on your terms never be scared to pursue them for it. Contact your bank about overdraft protection, which involves a small fee but is always cheaper than bounced cheques.

Starting or growing an international business, whether that is through an established marketplace and platform like eBay / Amazon, or trading through your own site directly, can be a great way to expand your business opportunity.

A crucial factor in global and international trading which can become a barrier without expert advice is currency transfer and the need to move money made (or paid) into another currency. If the exchange rates aren’t in your favor you could end up reducing cash flow that was unexpected, so make sure that you’re prepared for this international nuance. Foreign exchange brokers may be able to provide added expertise in this area to help you get going.

Final thoughts

These are a few of the many factors that need to be considered when starting up, or expanding your own business. Though many lessons can only be learned through experience, the greater you plan for the unexpected, the less you will likely be negatively impacted by it. Be as prepared and organised as possible to make your start-up a smoother and more profitable venture, and to mitigate excessive stress that can be avoided.