Doing business is always unpredictable. No matter how prepared you think you are, sudden incidents can throw off a solid financial plan.
However, unexpected costs are not always unforeseen. Sometimes, we overlook them. Mild emergencies such as computer breakdowns or consecutive resignations can disarm your cash flow if you’re not ready for them.
Underestimating these situations can cost you your entire enterprise. That’s why it’s crucial to prepare your business for these types of challenges.
Here’s a rundown of unexpected costs most business owners often miss and tips to resolve them.
Equipment is among the most important resources when starting a business. Different tools often define the nature of different industries such as convection ovens (restaurants) and drilling machines (construction).
However, these machines are susceptible to wear and tear after years of use. With this, it’s essential to allocate a budget for repair and maintenance. You can also schedule equipment checks every six months to prevent extensive utility damage.
For computers and gadgets, invest in extended warranties and coverage plans that provide replacements along with technical and software support.
If you’re renting a commercial space, your landlord will handle all structural issues within the premise. But if you own the property, it’s now your responsibility to handle these issues including structural repairs, plumbing issues, and electrical malfunctions.
Complications involving these can cost a lot. And ignoring these issues endangers you and your customers.
Always check for these risks and set a budget for utility maintenance. You’ll never know when a problem might occur.
Employee retention is essential for businesses to thrive in the industry. But if you don’t exert any effort to value them, they'll eventually leave — impacting your employee turnover costs. That's why it's important to apply effective employee retention strategies.
Prioritise creating an environment that appreciates your people’s efforts. Provide added perks other than the mandated benefits such as health plans, flexible work schedules, and dress down days. It’s also good to set up reward programs to motivate work productivity.
Shrinkage is the loss of inventory due to inside theft, shoplifting, vendor fraud, in-transit product damage, and cashier errors. In fact, the retail shrink total reached a whopping $61.7 billion in 2019.
You can minimize shrinkage with an efficient inventory system. This helps provide insights into your business’s shrinkage performance and source tag items from raw materials to consumer products.
Also, comprehensively screen employees for any dishonest and theft records. You can also tighten your security by purchasing CCTV cameras.
It goes without saying that all business should operate within the law. However, businesses can violate policies from time to time, even you. And these violations incur fees that you’re mandated to pay.
So, remember to dedicate enough funds to cover unexpected fines and penalties. Even with this, don’t be complacent. Be aware of your lawful obligations and implement them. It’s always better to keep your record clear of legal repercussions.
Payment delays and extensions are common negotiation outcomes in business. However, this can impact your income negatively, specifically the utility and manpower costs.
From the start, you should set up clear payment terms and not hesitate to hold your customers accountable by charging late fees. Also, try to discuss options with your bank on how to protect your business from bounced checks or overdrafts.
Every business is a potential target for hackers. This means your large enterprise is not excused and is still vulnerable to malware attacks and data loss.
In most cases, hackers ask for hefty financial demands in exchange for your data. Not only that, but the presence of malware and viruses in your system can interrupt business operations, resulting in revenue loss.
Because of that, it’s important to install security solutions that help you detect threats with daily malware scans and 24/7 security monitoring.
The only thing that can counter the unexpected is awareness. Knowing the worst of what might happen gives you the chance to prepare your business for possible damage and loss. Get to know these unexpected costs and start planning how you can minimise their impact.