Small Business Info

The Biggest Hidden Costs of a Small Business

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Maintaining a small business is a complicated task. It requires you to look at finances closely to make sure that the company will continue to profit. But there are aspects often overlooked that usually hurt the company. Here’s a run down of the biggest hidden costs of a small business:


When starting a business, it is difficult to put up your own establishment, thus entrepreneurs often result to leasing. This technique may look beneficial since you don’t spend a lot compared to constructing a new space. But if the leasing terms and conditions are not carefully examined, it may hurt your business in the long run.

Solution: Consult an expert like a lawyer or an accountant. They will have the necessary knowledge to decide if the leasing terms are appropriate and beneficial for the business.

Air-conditioning Units

This equipment contributes to a large amount in the electric bill of a business. Their purchase and maintenance also take a huge part of the budget.

Solution: Lessen your units and keep the office warmer. According to a study at Cornell University, warmer conditions tend to increase worker’s productivity. In the study, it was discovered that if comfortable warmth is established within the office, the business saves $2 per worker every hour.

Cellular Phones

While it is common for big corporations to give postpaid cell phones to employees, it will be a crucial move to do the same with a small business. You will never know if your employees will only consume his/her minutes for business related calls unless you track down their every statement. But since small business takes extra time to manage, you will not have that privilege to check on your employees every time.

Solution: Add a communication premium on top of their salary. Bobra Bush, the president of Telcom Corporation, suggests this because you no longer have to purchase phones for your employees. Spending $50/month will be more cost-effective for your business rather than getting a plan for $100 per employee. You will no longer have to worry if they go over their minutes due to personal matters. So you get big savings overall and increase your employees’ productivity due to fewer hours over the phone.

Office Supplies

Common supplies like pens, staplers, highlighters, tape, notepads, paper and others are one of the biggest hidden costs of small business. Unlike other companies, small businesses don’t tend to have a central supply department thus these supplies are often used inappropriately. In the long run, the frequent purchase of office supplies will hurt the budget that could have been allocated for more important matters.

Solution: Control your supplies. Require your employees to log every supply that they use. This way you will have an idea on the quantity you need to purchase and will also allow monitoring of each employee’s usage. You can also put a limit to the supplies they are getting; an example will be allowing only 5-6 pens/month for each employee.

Watch out for these hidden costs as they may break or make the future of your business.

This article is written by Danny Duric, a freelance writer from Australia. He has a bachelor’s degree in Business Management. The last 2 years actively writing about business related topics.

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