It’s often said that you should expect the unexpected. This slightly contradictory advice isn’t just for survivalists, it’s vital for business owners.
If you’re a small business or sole trader, money might be a little tight; unexpected costs can quickly spiral out of control.
Let’s help you get prepared by looking at these unexpected business costs:
● Hiring new employees
Hiring new employees
On average, hiring a new employee costs £3,000 and takes 27.5 days, and that’s just the initial cost of recruitment. There are several hidden costs when you consider training, benefits, equipment and anything else they might need.
Two distinct scenarios might drive your need to hire new employees and we’ll look at these in more detail:
Employee turnover is an inevitability. People eventually move on for one reason or another, but they should never move on because they feel unhappy in their job.
If you’re unaware that an employee is unhappy and they leave suddenly, it can lead to large, unexpected hiring costs. That’s before you factor in the money that it’s costing your business to be a person down.
The only way to help mitigate this is by taking steps to find out how your employees are feeling about their work.
This doesn’t need to be anything excessive. Just schedule regular catch-ups with your team, encourage feedback, and try to foster an atmosphere of communication and honesty.
Doing this will keep you in the loop about how your employees are feeling. Sometimes even the act of listening can help; a little empathy goes a long way.
The balance between workload and your staff headcount is a tricky one to manage. You don’t want to spread your workers too thin, but you also don’t want to spend more than you need to.
Hiring a new employee can bring a few unexpected costs. We’ve already mentioned the costs of recruitment, but you also need to factor in benefits, equipment, uniforms, insurance, sick days, holidays and training.
The key here is balance; you need to ensure that the cost of new hires is justified by your business’s income.
Countingup can help you keep detailed financial records to give you an accurate trajectory of your profits, so you’ll know exactly when you need a new hire to keep up with the workload.
It’s one of the more abstract concepts to manage, but time is money.
For sole traders, this can be particularly difficult, but you should always remember that your time is valuable, even when you’re on your own.
For businesses with more staff, this gets a little more complex since there is literally more time to manage.
For example, if you hold an hour-long meeting for 10 employees, each earning £10/hour, that meeting will cost your business £100. And that’s even before you take into account the work they weren’t doing during that hour.
We’re not saying you shouldn’t hold meetings. Only that you should be aware of what those meetings are costing, in real numbers. Factor those real numbers into your expense report, and ask yourself, was this meeting worth it? Would a 10-minute call have sufficed instead?
With Countingup, you can record all your income in a certain period and compare it to your expenses. This gives you real-time information about how much money your time is worth.
This one applies to businesses of all sizes. Whether you’re working from home or on the road, equipment replacement or repairs are going to come up sooner or later.
Insuring your valuable equipment is a good start, especially for those things that allow you to provide your services.
Investing in good quality equipment is also a good idea. It may cost more to begin with, but could save you money in the long term just by lasting longer.
Finally, treat your equipment with care and conduct regular maintenance checks. If you rely on vehicles, get regular MOTs, even if it’s not legally required. Don’t ignore small issues, like cracked windows or strange sounds. Get them fixed before they turn into more expensive problems later.
If you’re using a lot of tech, like laptops, tablets or smartphones, invest in protective casings and use robust antivirus software. Malware and viruses can not only affect how your device operates but also jeopardise any client information on your device.
Finally, factor equipment repair costs into your budget and set the money aside. If you need it, you’ll have it. If you don’t, all the better.
One of the hardest parts of running your own business is staying on top of taxes. It’s easy to put it to the back of your mind then suddenly, before you know it, it’s April again and you’re hit with a massive tax bill.
Managing this comes down to 2 things; good bookkeeping, and knowing what you can claim back.
The Countingup app makes it easy to keep organised records of all expenses, so that you’re well prepared when tax season comes around.
There are loads of things you can claim as a small business or sole trader. Things that a lot of people don’t even consider.
Sole traders and small businesses often don’t realise that they can claim back tax on:
● Uniform or work clothing
● Travel expenses
● Vehicle leases
Even if you’re working from home, you can often claim tax on things like:
● Mortgage interest
● Council Tax
● Water and electricity
● Property repairs
● Cleaning costs
How Countingup can help you manage unexpected costs
Many unexpected business costs can be mitigated with better financial bookkeeping and planning.
The Countingup business current account comes with a handy app that automates a lot of the tedious aspects of financial bookkeeping.
It keeps track of all your income and expenses in real-time, so you’ll always have an accurate picture of your business’s performance. Find out how Countingup can save you hours of financial admin and help make your bookkeeping a whole lot easier.