The Hidden Financial Costs Of Growing Your Small Business
The thing with small businesses is that we don’t want them to stay small forever. We want them to become medium-sized businesses, and possibly even big businesses one day too. Growth is seen as the natural progression, and it’s something we all aspire to see.
Saying this, growing a business isn’t as easy as it may seem. The most attractive aspect of growing a business is the thought of making more money. But, you also have to think about the other side of the coin; you spend more money too. In fact, there are so many financial costs of expanding a small business – some of which are less obvious than others. Today, we take a little peek at the not so obvious costs.
Increased Marketing Costs
You’ll never grow a business unless you increase your brand awareness and become well known by the public. The only way you can do this is if you heavily invest in a marketing strategy. A lot of business owners forget about this when they think about growing their business. They focus on other things like the costs of moving to a new office or bringing in more staff. But, you can spend loads of cash on a new marketing campaign, and it’s largely unavoidable.
More Money Spent Fixing Problems
Hiring more employees is an obvious cost of growing a business. But, along with this comes another hidden cost. With more staff on your books, you have more potential for issues to occur. Let’s say one in three employees suffers a technical problem every month. If you only had three employees then it’s not a big issue. But, if you now have 300, then you can see how the problem multiplies. I mention technical problems because IT issues are the most common when you hire loads of new staff. As a result, you can spend so much money fixing these newly occurring issues. Granted, you can pay for a managed IT support service, but that’s still an extra cost you may not have thought you needed. So, just be aware that you may have to invest money on extra services to help stop you from spending money fixing the problems that come with more employees.
Money Lost Due To Increased Employee Turnover
It feels like employees have been a running theme in this article. I think that’s because they’re such a key cost when growing a business. As I’ve mentioned multiple times, it’s clear to everyone that hiring new people means more money gets spent on wages, benefits, etc. But, having more people in your business also means your turnover rate can increase. There’s more chance people will become unsettled and choose to leave. When this happens, your business can lose a lot of money. I guess one of the key things to take away from this article is that more employees don’t necessarily mean more success!
It’s clear now that there are some hidden costs to think about when growing your business. Of course, consider the more obvious ones as well! By thinking about some of the lesser-known costs, you can truly run the numbers and figure out if you can currently afford to expand your company. Don’t be afraid to take things slow and wait until the time is right to grow.