So, you have your business plan in place and you’re raring to get started steering your own ship. Where many new business owners run into problems in the first year, however, is with cash flow. The big costs are easy to spot; it’s the small additional costs that can add up and cause short term problems. Here are some of the costs to look out for when planning for your new business.
Fit-outs and installation
Plumbing, carpentry, electrical services and interior decorating…the list goes on. Whether you’re in retail or fitting out your new office, getting your premises ready for business is one area that can quickly skyrocket –and issues such as old wiring or shoddy workmanship can throw unexpected costs into the mix too. In this case, a short term new business loan may help you to complete the fit-out in time for your opening date to ensure you get started on the right foot.
The many costs of having a team
Many new business owners know the wage to be the biggest expenditure of having employees, however there is a whole multitude of other costs to take into consideration. You’ll be paying for superannuation, WorkCover and annual leave. There’s the cost of break room supplies and potentially uniforms. Plus, one big hit to cash flow is the process of hiring and training new staff, which can easily add up to tens of thousands of dollars depending on your business.
Licensing and insurance
No matter what your business type, there will be costs involved in complying with legislation and covering yourself for the worst case scenarios. Most businesses will be paying premiums for public liability insurance and, if you have premises, fire and damage insurance too. You may also have industry-specific licensing, registration and permit fees to account for in your new business finance plan.
Stock in hand
Controlling your stock levels is a crucial part of successful business management. The trick is to avoid over-buying or under-selling to maintain healthy cash flow and stock levels, and taking measures to move perishable or seasonal stock for optimal returns. There are also warehousing, insurance, shipping and financing costs to factor into your stock allowance.
One potential pitfall for many new businesses is the first year of tax obligations, which will likely include yearly or quarterly GST payments as well as PAYG costs. Setting up a separate account for your tax obligations can help to avoid last-minute panic as the end of financial year looms. It’s also a good idea to talk to your accountant early on to go over what you’ll need to keep aside for your particular tax payments.
With careful planning in place for your new business finance, you’ll be well on your way to building a thriving business. If you need something extra to get you to launch day or to set you on the right track for success, contact the team at Interim Finance to discuss our flexible options for new business loans.