8 Hidden Business Costs

8 Hidden Business Costs

When it comes to running a business, it’s easy to think you have it all figured out. You’ve created a business plan, worked out profit margins, and done your market research. But what about all the hidden costs that come with running a business? Fail to factor these in and your business could tank before you even get started. This guide will take a look at some of the most common hidden business costs. 

Permits and Licenses

Depending on the type of business you are running, you might need to apply for certain permits and licenses. For example, if you’re running a local store that sells alcohol, you will need a liquor license. This depends entirely on the type of business you run and where in the world you are situated. It’s worth doing this research before you start buying office chairs and water coolers. 

Office Space and Utilities

Office space and utilities aren’t what you would normally consider a hidden cost. However, many new business owners underestimate how much they will actually cost. It’s important to factor this cost into the monthly running of your business. Plus, when you scale the business and hire new employees, you will need more space. 

Equipment Maintenance and Upgrades

Some businesses require a lot of industry-specific equipment. For example, construction companies need plant equipment. This is probably something that you have factored into the business plan but have you considered regular maintenance and upgrades? Without looking after equipment properly, you could end up with a huge surprise bill. 

Employee Benefits

Want to keep your employees happy? Then you need to provide employee benefits. The actual cost of an employee goes well beyond their actual salary. You need to consider paid time off, specialist company health insurance, dental insurance, retirement benefits, annual staff parties, and more. 


Shrinkage refers to any stock that is damaged, lost, or stolen. You need to factor a shrinkage percentage into your business plan, otherwise, it could eat into your profits. It’s almost a guarantee that some stock is going to get damaged, lost, or stolen. However, if shrinkage gets out of hand, profits will decrease significantly. 

Payment Delays

Most businesses will encounter some delay in payment. This can cause a cash flow problem, which could result in your business needing to take out a loan to cover the delayed payments. If that’s the case, you need to factor in the interest of the loan. Keeping on top of cash flow is essential if you want to run a healthy business. 

Legal and accounting fees 

Most small businesses outsource legal and accounting fees, instead of hiring in-house. While this is a cost-effective way of completing necessary business admin, it can get really expensive. It’s important to manage these professional services to stop them from eating into your business profit. 

Credit Card Fees

If customers can buy your products with a credit card, you might have to pay around 3% in vendor fees. Credit cards can be useful to small businesses but the hidden fees can be destructive if you’re not aware of them. It’s best to seek the advice of accounting before incorporating any credit card functions into your business.  

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