Preparing for Unexpected Business Costs
We can all prepare for the likes of rental fees and employee wages, but when it comes to unexpected costs, the challenge is greater. After all, how do you prepare for something you’re not anticipating? Well, that is the art of a good business owner: someone who can anticipate the risks they face and put measures in place to ensure they are prepared. One of these measures involves setting aside the money that is required to face any hurdles that could come along and rock the boat. With that in mind, let’s take a look at some of the most common unexpected business costs most companies face, as well as some tips on how to prepare for them more effectively.
Health and safety issues
Health and safety issues can cost businesses a substantial amount of money. This is especially the case if someone has been injured on your premises and you are liable. If you have not put the correct health and safety measures in place, you could find yourself on the wrong end of a compensation claim. Not only will this cost you money in terms of damages, but you will also have to spend a considerable sum of money on fixing your reputation. After all, there is a high chance that the press will get a hold of what happened, and this will show your company in a negative light. The best thing you can do is invest in safety experts now to save yourself a lot of money down the line. From carrying out risk assessments to implementing effective training policies, safety professionals will ensure that you have got all of the correct health and safety measures in place to protect all employees and members of the general public, as well as the future of your company and your bank balance.
All businesses aim to grow, yet very few plan for the expense that comes with this. Of course, you are going to need to hire more employees once your business expands, and this comes at an extra cost. Not only this, but you will need to invest in new office equipment, training, and some extra supplies. Needless to say, the main reason for growing your business will be to make more money in the long run, but this will come at a cost initially so it is important to make sure you are in a position to handle this.
It is not uncommon for business owners to face electrical issues or plumbing problems, especially if they operate out of an old building. If you need to get an electrician in to rewire an old property or you require a sewer line dug up, you are going to need to spend a few extra thousand pounds than you had planned for.
Nowadays, the threat of a data breach is a very real one, and it is a threat that all businesses experience, no matter the size of their firm or the industry they operate in. A lot of small business owners mistakenly believe that this is something they do not need to concern themselves with. They have the “it won’t happen to me” approach. However, this can end up being an incredibly costly approach to take. After all, while you may assume that you are a small fish in a big ocean, so to speak, a hacker will view your business as an easy payday. They will know you have not invested heavily in cyber security measures, and so they will assume that your system is going to be easy to breach. This is why it is imperative to invest in robust data security measures so that you do not become the victim of an attack. After all, a data breach can cost your business thousands, and even millions, of pounds. Not only will you need to spend money on finding the security vulnerability the hacker exposed and rectifying it, but you will face fraud losses, non-compliance fines, the cost of compensating those that have been impacted, as well as the cost associated with rebuilding your reputation, which will have taken a severe hit. Another way to plan for the expense of a data breach is to make sure you have a solid plan in place that details the steps you need to take should this happen to you. This will enable you to act quickly so you can minimise the damage.
We tend to assume that all unexpected costs arise from problems, but this is not always the case. You could find yourself facing an expense you did not anticipate because of an opportunity that has arisen. For example, maybe you have an unexpected opportunity to expand your retail space because the tenant in the property next door is vacating. Or, maybe you have the chance to purchase something because of a one-off discount that is running? There are occasions whereby opportunities will arise that can benefit your business yet they are going to require more capital than what you have planned for.
The final unexpected expense that a lot of business owners fail to plan for is equipment breakdowns. This could be anything from computers and construction equipment to precision cutting tools and kitchen equipment, such as an oven or stove. No matter what type of business you run, if you rely on any form of equipment that is critical to your day-to-day running, you need to make sure you have some money set aside should you need a replacement or repair. After all, any downtime is only going to cost your business even more money.
Hopefully, you now have a better understanding regarding some of the most common costs that business owners face today. If you can prepare for the expenses that have been mentioned above, you will give your company a better chance of surviving and thriving.