9 Savings You Can’t Afford To Make When Running A Business





When you think of starting a business, you calculate the capital required for obvious expenses like premises, inventory, salaries, marketing etc. However, many business owners fail to identify some other essential, unavoidable costs. Which is one of the reasons why a large percentage of start-ups fail in the first three years!

Just when you think you have counted everything, you may have missed out on some of these ‘not so obvious’ expenses. Although these vary from business to business, let’s have a look at some common expenses that most businesses can’t avoid.

“When you are in business for a long time, you go through good times and bad times. When you go through bad times, you learn to control costs, satisfy customers better, satisfy employees better and become more transparent. Therefore, you build character in the company.”

R. Narayana Murthy


1. Insurance

When building a business, it’s extremely important to protect it. Insurance provides coverage for any possible loss. For instance, you own a supermarket and just a few months into your business, a fire broke out – or you run a car rental company and one of your customers had a car crash. Insurance would come as a saviour in such situations.

While some startups may have included insurance in the initial costing, it can turn out to be pricier than expected. In addition to the minimum coverage, you may want to add different types of insurances to further protect your company. Hence, it’s suggested to hire an insurance expert to guide you through what you need and how much it would cost. Although the insurance you need depends on the kind of business, here are some typical insurance policies which most businesses require:

  • General insurance: protects you from unforeseen loss, theft, etc.
  • Medical insurance: depending on the type of business, some owners must get medical insurance for their employees for instance to cover any unforeseen accidents on a construction site.
  • Employer’s liability insurance: having employees would automatically require you to have this.
  • Commercial vehicle insurance
  • Professional liability insurance: this should be a top priority as it will shield you against any potential lawsuits. Despite all measures, some businesses get caught up in legal issues and they end up paying heavy legal fees.


At the initial stage of a business, the insurance cost may not seem to be significant. However, as your business grows, your operations expand, you hire more staff and several other stakeholders get involved, the cost of your insurance policy is likely to increase.


2. Tax

Whether you own a large company or a small business, you need to pay your taxes! It’s important to calculate all the personal and business income taxes you are expected to pay. Stay updated with recent tax policies, rates, and your deadlines. If you aren’t the one to crunch numbers, it’s better to hire an accountant to manage all your taxation matters.

“The Profit and Loss Statement tells you a lot about how your business is doing. It can also help you to determine ways that you can go about saving money so that you get to bring more money home! Basically, the P&L statement measures all of your income sources verses all your business expenses for any given period of time.”

Darren L Johnson

3. Permits and Licenses

For certain types of businesses, you may need a license or a permit – this will involve completing relevant paperwork, providing legal documents, and getting permits from local and central government authorities. This process has its costs which you may overlook.

In addition to these basic licenses to authorise your business, authorities may require you to get additional permits related to your industry. For example, in some cases if you install signage in front of your building, you’ll need a permit for that.

One important point which many owners neglect is that the licenses and permits fee isn’t a one-time expense. They need to be renewed yearly or as required. Hence, they need to be calculated as an item of recurrent expenditure.

If you are planning to open branches in various locations, you must include permits and renewal costs for each area you plan to work in. This cost can also increase with time due to changes in government policies. Be sure to research and include all the licenses you require to avoid any future legal or financial trouble.

Similarly, your industry and customers may expect you to be a member of certain groups or trade/professional associations, which in most cases will be a monthly or annual cost.



4. Professional Services

You can’t have the skills and knowledge to handle every aspect of your business. This is where you need to hire professionals to help you out. For example, you’ll need a legal advisor to help you through any legal matters that may arise. You’ll need an accountant to keep track of the money coming into and going out of your company and getting the annual audit done. Your accountant will also provide you with financial and tax advice for important business decisions.

For a new business, this might seem expensive, some may even choose to not hire professionals and try to manage these things themselves! The fees for these professional services may appear heavy on the capital initially, but they will save you from the legal and financial irregularities which can be very costly in the long run.


5. Card Payment Transaction Fees

You may need to collect payments via credit or debit cards. To enable card transactions, you’ll need a compatible business bank account and equipment like a card machine or an online card payment system. Each card transaction charges a small percentage as fee. The fees generally work out higher for lower volume and/or low value transactions. They may also vary for debit and credit cards. So, bear this in mind – there are many services out there, make sure you scan the market and select the one best suited for your business.


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6. Employee Expenses

As your business starts expanding, you’ll need more people to help you out in the day to day proceedings. This can be costly and hiring and training a competent team is a tedious task. Employee expenses can include training costs, benefits and taxes along with their base salaries and hourly rates. Hiring is a long and draining process. From advertising and going through applications and cover letters and then reaching out for job interviews is time-consuming. Once the selection is done, new staff members need to be trained, which can take some time and cost you significantly.

Moreover, selecting the right candidate one who is fully aligned with the values of your business is very important. The wrong person can be an expensive burden for the company and not just that, they can also demotivate other employees!

Looking after your employees is crucial to establish their loyalties and keep their morale high. The employee rewards and benefits, annual lunches, parties, etc. can be an additional expense. Therefore, you need to rethink whether these measures are going to benefit your company or not before you invest in these.


7. Equipment Maintenance

 Whether you own a clinic or a software company, you need equipment to run your business. From a single laptop for a freelancer’s home office to a whole range of latest computers in a formal office environment, equipment is needed at any stage in any kind of business. Whether you get it from discount stores or buy it second hand, the cost of this purchase can’t be ignored.

Once bought, it’s your responsibility as a business owner to maintain it and ensure its proper functioning. If you have a dental clinic, you need to ensure proper hygiene and sterilising of tools. You need to check if other electrical equipment is working efficiently. Like it or not, every equipment needs repairs or replacement. Failure to maintain your equipment can lead to a waste of time, loss of data or even money.


8. Technological Costs

Businesses can’t function and stay relevant without using modern technology. You need the most updated software and apps to increase your work efficiency and save time. The software can also replace the cost of one employee. For instance, you don’t need an employee to check on the available stock in a pharmacy, you can simply maintain the records in software.

“Engineering or technology is all about using the power of science to make life better for people, to reduce cost, to improve comfort, to improve productivity, etc.”

R. Narayana Murthy

Technological costs can appear so meagre that some business owners easily forget to count them in. However, these can include getting a good internet connection, software licenses, website domains, blog space, laptops, tablets, and other gadgets. Some of these can be outsourced to other companies or freelancers to save time and money.

If you run a photography business, you don’t just need the most professional camera. You’d need to update your lenses regularly, pay for a video and photo editing software, computers, printers, and other relevant equipment. Similarly, Web-based online business is considered to have low overheads but they also need to buy speedy internet connections, web domains and hosting services.

9. Payment Delays

As a business owner, you may try your best to make timely payments and maintain goodwill but you can’t expect to be reciprocated in the same way. The companies and customers you work with might delay payments which can in turn adversely affect you and restrict your cash flow.

Smooth cash flow depends on customers making payments on time. Payment delays can lead to serious problems for your company, especially when you’re a small business and don’t have a lot of money in the reserve and are likely to be depending on payments from your customers to cover your own expenses – that are expected to be met on time! Delays in the inflow of money can lead to unarranged overdraft charges, negatively impact your credit score and damage your credibility with your service providers.

To avoid such issues, you need to decide favourable terms and conditions in your invoices and actively follow up with your clients. Despite all these efforts, sometimes the unexpected happens. Payment delays are common in business so you should be prepared with some backup to manage your immediate expenses like salaries, rent, and other utilities.

“You have no control over the market. You can’t predict where it will go, and you can’t bring it back from the depths. What you can do is save more. Make sure you have cash on hand – an emergency fund of at least six months of expenses.”

Jean Chatzky


Most small businesses are driven by passion. The owners are enthusiastic to launch their ventures and therefore it’s easy to overlook some important but not so obvious expenses, which can lead to problems off all sorts for the business and a lot of stress for the owner!

“I took business and economics courses. More than anything, I learned the proper steps and the things that need to be outlined. You have to keep your books: how much money you made, how much money you’re spending, what you profited, and what you’re gonna need for expenses.”

Karen Civil

It’s advisable to do complete research and consult other people of your field to familiarise yourself with the stakes. These costs may seem insignificant initially but if ignored, they can bring down your entire startup. To summarise as a quick reminder, some essential business costs are;

  • Insurance
  • Permits and licenses
  • Taxation
  • Professional Services
  • Card Transaction fees
  • Employee expenses
  • Equipment maintenance
  • Technological costs
  • Payment delays


Certain strategies can be deployed to cut down these expenses but it depends on the decisions you make, and the payment terms and conditions you set. It’s wise to regularly analyse your numbers in detail, regularly review your policies and compare them with other businesses, stay updated with government laws and changes in your relevant industry and then craft your policies accordingly; where you lack the skills and knowledge, hire the services of professionals.


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6 Secrets to Maintaining Healthy Cashflows as You Grow Your Team

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