It’s time to live the American Dream and start your own business. It’s a venture that’s exciting, terrifying, and exhilarating all at the same time. Starting your own company comes with all the risks and rewards of the entrepreneurial lifestyle, and you’ve surely done your homework before taking the leap of faith. Everything from a business plan to costs and capital go into the first steps of a new small business and you feel prepared, right?
Don’t let this statistic discourage you, but it is a reality: eight out of 10 small businesses don’t make it 18 months. Why is never simple, but one way or another it comes down to money. You might have a good handle on your costs going into your first business, but there are the “hidden” surprises that can ruin even the most prepared. Before giving your finances a final look, be aware of these hidden costs that every small business owner will face.
If your company relies on its physical location for business, you’ve probably prepared for property and liability insurance. But with the increasing threat of data breaches, cyber insurance is becoming common to the point of necessity. It doesn’t matter if you take credit cards in-store or rely purely on e-commerce for sales, hackers could possibly steal your customers’ personal information and leave you on the hook for liability (something typical liability insurance might not cover). Cyber insurance can cost thousands per year, depending on the size of your customer base and systems you use, and it’s a number that could cripple your budget if you’re not prepared.
While hackers are the new threat of the 21st century, criminals are not above an old fashioned break-in either. Your place of business needs protection but security systems are expensive to install (or in most cases, have installed for you). You can either prepare for the high price of a professionally-installed system or cut costs with an affordable DIY security camera system that can keep tabs on your entire building (up to a certain size).
We all know the line about death and taxes, but don’t assume that just because your business isn’t making an instant profit in the beginning that you won’t be paying much in taxes. Things like payroll taxes can apply to your own income, even if your company is in the red. So one way or another, Uncle Sam is going to make sure he gets a paycheck of his own. The best way to stay on top of taxes is to make sure you’re taking all of the possible deductions (while keeping honest and not going overboard).
If you’re an entrepreneur ready to venture out on your own, we can assume you have the right work ethic and attitude to make it happen. But even if you’re content with 12-hour workdays, it might not be enough to push your business out of the 80 percent failure rate. Your time is limited and other people’s time is expensive. There is no doubt you have the will to do most of the job yourself, but you should prepare to pay and delegate to others if you want your company to be a success.
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