Every business out there should be careful with their budget. And when you’re a small business, you’ve got to be as strict as possible. A budget gives you control, you get to boss your money around instead of your money telling you what to do. Knowing not only the obvious expenditures like payroll, rent, and utilities but also how much is in the budget for professional development, software subscriptions, travel, and the “million other little things” that reveal themselves as your business grows.
But what costs are going to cause the most trouble? Well, we can mostly split business expenses into two categories: fixed (like the rent and payroll from above) and variable (the “million other little things” from above). Indeed, some costs occur month by month, some every 6 months, and some once a year. And then there are the true variables that seem to strike whenever they like!
It’s some of these latter costs that we’re going to list below. Costs that only fit into the budget from time to time are the hardest to plan and account for. They’re also likely to be the biggest expenses you’ll have to deal with (those little things add up), even when paying out bit by bit. Make sure you keep them in mind when you’re building your budget for the future.
Expanding Your Network
How much time do you spend each year heading off to conferences or “being seen” at networking events? If you plan to do so at least twice a year, this needs to be accounted for in the budget. You’re likely going to be using a company credit card to pay for these trips, and they often do not come cheap.
It’s important to network on a regular basis, and doing so in person has ten times the impact of speaking to someone over email or a chat messenger. Don’t give up on taking these trips, but make sure they’re properly incorporated into your annual expenses. You may have to cut back, you may have to network closer to home, or you may find there’s even some spare cash lying around!
Research and Development
Even a small business needs to do product research. If you don’t, you’re never going to come up with something new and innovative to show your customer base. Without a healthy bit of growth in this department, your company is going to lose value by the year. If you’re a small business with only a couple of employees, make sure you start small here too.
R&D is a crucial part of evolving your business from one step in the business plan to another. But even Facebook ads aren’t cheap and finding the money for them or other research and development projects can be difficult. The good news is you can usually find ways to offset these costs with some planning. Consider different options for lowering your tax bill or applying for tax credits that carry long-term benefits. Finding creative (and legal) ways to reduce expenses and taxes can offset the costs of R&D efforts so you reap the full benefits without busting the budget.
IT Support
If you’re not a computer whiz capable of providing network support for yourself, you’ll need to need to budget for IT support going forward. If you’re a one-person business with a website you designed through a builder, this should come built-in and should already be accessible to you through your subscription.
However, if you’re a bit bigger than this, have built your own website, and have a small team on the payroll, outsourcing your IT needs can save some money. You’ll still have someone to reach out to when the network goes down, but you won’t need an in-house department that could take some very expensive months to set up.
Your website is your storefront and when it goes down, your business can grind to a halt meaning loss of revenue. Having a good IT support team in place and on-call (that fits your budget) is priceless.
Commuting
How much does it cost to get to work each day? The price of getting into work is usually an individual’s responsibility, but more and more we are seeing a shift in this in the modern working world. Some companies now cover all commuting costs, while some only cover costs if the employee has had to go out of their way to get to work.
This is something you should take into account. If you’re requiring employees to come into the office despite a remote working arrangement, your employees may in turn ask for their expenses to be taken care of.
Similarly, if you have a business fleet that your employees use on a daily basis, you’ll need to pay for the fleet’s fuel and upkeep. Even when you’ve only got one or two business cars to your name, it’s still considered a fleet and it’s still going to be expensive!
In this scenario, look into fuel card comparisons to keep costs down, and make sure employees are keeping a proper schedule of when the cars are in use and the average distance completed each week. You need to know these details to create an accurate monthly budget.
Upgrading Equipment
You won’t be able to use the same computer for the next 10 years. You won’t even be able to rely on the same wifi signal! You’re going to need to upgrade your equipment and connections from time to time to keep your company operating safely (think cyber security) and efficiently.
Without up-to-date technology in your office, you could be a victim of the next big data leak. You could also struggle with unexpected downtime; it’s becoming common for companies to ‘slow down’ older products to force consumers into buying the newest version. You need to be looking ahead, if your budget won’t stretch to a new set of Mac computers right now, how long will it be until you can afford to? Looking into options such as leasing equipment or software subscriptions might be a way to make these upgrades more palatable to your budget.
Keeping the Lights on
How much is your utility bill right now? Sure, you always expect to pay for your electricity use, but with inflation causing a current cost of living crisis, are you scared to even look at that next bill? Try not to pay utilities and other expenses on credit. If you do use a credit card (some people do this for the points) make sure you’re paying the balance monthly and not accumulating high-interest debt. Know your expenses and your budget and don’t let credit card debt sneak up on you.
Bottom Line
Some business costs will be harder to account for than others; that’s just a fact of running a business. However, when you’re aware of these occasional, usually high costs, you’ll always have funds set aside to cope with them. Maintaining a budget lets you know your “runway” for how far the money will go. As with a personal budget, you need an emergency fund and a plan. To work out the numbers, start with the need behind them, the ROI, plus how much and how long you expect to pay for the expense. A little bit of research goes a long way!
