He’s accustomed to the monthly cost of operating a small business, but what happens when your company is ready to grow? There are nearly more than 5 million small businesses in Mexico. With so many opportunities, don’t let unforeseen company costs or energy costs get in the way of your small business growth.
What are the biggest unforeseen costs when operating a small business?
Location and energy costs
As companies grow, so does the need for space. Business expansion can be an exciting time, but small business costs increase rapidly. Make sure to consider your company’s real needs before expanding beyond your capabilities.
Companies like Quartux change the consumption curve and replace expensive energy with cheaper and cleaner energy through their custom control software for each client. They take advantage of CFE’s tariff schedules and charge their battery systems with energy when it is cheap (base rate) to then use it and replace consumption during expensive hours (called “peak” by CFE) where more than 40% of the bill is charged.
They also have a real-time monitoring system for all electrical parameters of the charging point that provides valuable information about energy efficiency and consumption profile modification.
With this type of solution, the customer forgets about any interruptions in the network since they have a backup system that protects the user from blackouts and poor quality energy. All this at zero cost and with an installation and delivery period of less than three months.
Where should your small business be located?
Consider if you need an expensive commercial space for high foot traffic instead of a quieter office space located off the beaten path or a warehouse with controlled climate near a major road. The location you choose and the size of the space will significantly affect commercial and energy costs.
With businesses like restaurants and boutiques, in addition to location planning, pay close attention to:
Your lease term versus the potential growth of your small business.
Some companies seem to grow quickly overnight, while others thrive over decades with slow expansion. Consider your rate of advanced growth when signing a lease contract and negotiate possible exit clauses, protections to maintain space, or expansion options in the same location or neighboring locations for the future.
If utility and maintenance costs are included in your lease contract.
From electricity to roof repairs, or property taxes to HVAC units, the costs and maintenance responsibilities included in leases can vary. This also means that your energy costs will change from month to month. As a tenant operating a small business, it is good to know if your landlord is using a variable rate energy plan or a fixed rate plan. If your landlord has a fixed-rate plan, you will understand better and be able to budget your monthly expenses.
To better understand leases and what each business owner should pay based on each, including energy costs, here is a list of common leases:
What costs are the responsibility of the small business owner for each type of lease?
What new business costs should you consider for equipment?
Many businesses rely on electronic equipment to provide resources, maintain records, operate services, and much more. You will decide how your small business growth increases the amount of equipment you need to operate in your new space. You may also want to upgrade electronic equipment. For example, computers are common in most workplaces and many businesses switch from desktop computers to laptops to accommodate more flexible and remote working environments. If you are concerned about the energy use of computers, consider the following: laptops use 80% less electricity than desktop computers.
Moving to a newer or larger space also requires reassessing your security needs. If a standard door lock no longer cuts it, a security system will give you peace of mind. There are many security systems for businesses, with services such as video surveillance, hardware warranties, and more. The level of security you choose will affect what you pay, and associated energy costs may increase accordingly, so choose a plan with your monthly budget in mind.
Professional service fees
Growing a small business means you need to consider more professional service fees and business costs, such as pest control.
Professional services such as lawyers, accountants, and subcontracted human resources can be expensive, but the cost of not having them can be much higher in the long run. Many small business owners allocate more budget to professional services knowing that this will help them have more time to deal with the growth and operation of their small business.
Another unforeseen hassle, and a potentially catastrophic problem if not solved immediately, is pest control. There are many natural DIY ways to prevent these creatures from finding a home in your business, but if the problem persists, hiring a professional pest control service is a good choice.
Employees
Keeping up with all the tasks of a company can be overwhelming and lonely. It may be time to hire your first employee or more team members if you already have employees and/or contractors. Before hiring, consider how these small business costs influence your decision:
a) More employees lead to higher overhead costs.
Each new employee will cost more than their base salary or hourly rate; you will need to take into account the time it takes to train them, professional development fees, any equipment they will need, additional energy costs, worker’s compensation insurance, taxes, payroll costs, and the cost of your time. Before hiring, do the calculations to make sure you can cover the significant costs that come with each additional team member.
b) Creating an office culture can be expensive.
Many small businesses are focusing more on developing a culture that reflects their values and mission, while making employees feel a purpose in the work they do. Creating this purpose-driven culture can be as cost-effective as communicating the company’s mission and values to all employees during the interview and hiring process, or it can also be an unforeseen business cost. Expenses such as team outings, team lunches, rewards for employees, and health and wellness benefits for employees can add up to a hefty bill. Consider how using these may be necessary to operate a small business and whether they will positively impact your workplace culture.
Insurance
If a lawsuit is not on your company’s to-do list, liability and property insurance should be one of your top priorities. Small business owners want to create a safe environment for anyone entering their businesses, but accidents happen and the costs of small businesses associated with legal fees can add up. If you have an owner, you may accept some legal responsibility for an injury, but most of the time, the blame will fall on your business.
Who should your small business insurance protect?
Employees Customers Neighbors Vendors Lawyers Intruders (yes, even intruders)
There are also other small business insurance policies to consider, such as:
Product liability insurance Professional liability insurance Commercial property insurance Home-based business insurance
Maintenance and repair of operating equipment
No matter what your small business is, at some point you will need to repair or replace your equipment, whether it’s printers, photocopiers, machinery, kitchen equipment, or more. When these unforeseen business costs hit, they can immobilize your productivity and your overall budget. You can avoid a surprise repair by following a maintenance schedule for your business equipment. Sometimes, preventive service still isn’t enough for serious breakdowns, so you should have an emergency fund for unforeseen repair costs.
Operating a small business is stressful even when things go as planned; don’t let unforeseen costs get in the way of your small business growth.
What are some unforeseen costs for small businesses that you have experienced or witnessed before? Comment now to share your wisdom!
