This is a guest post from Tricia Borren.
If you run a business, it’s guaranteed that you are going to have expenses. However, by budgeting for those expenses ahead of time, you can set an appropriate price point that will help you make a suitable profit. What are some common expenses that you will have to account for?
To get your products either to your store or to your customers, you are going to need to ship them. Therefore, you are going to have to account for shipping costs and find a shipping option that allows you to ship the highest number of goods while also improving your retail distribution time.
You can’t do the job all by yourself. Make a plan to account for payroll costs, the cost of providing benefits to employee, and the cost of hiring temporary workers or independent contractors for special projects.
There may be costs related to maintaining machinery, keeping your building clean, or other upkeep costs related to your business. Depending on how willing you are to do things yourself, you may be able to take care of some of the maintenance on your own.
How are you going to reach your customers? Typical marketing costs include online advertising costs, production of posters or billboards, and if you choose to use television as a way to market your product, that is going to cost you for the commercial spot as well as the actors for the part. Most small companies stick to online marketing as it is easier and cheaper to do so. Radio advertising is is a relatively cheap and effective way to advertise for your company. In a single week, radio reaches more than 228 million Americans; that is a lot of advertisement time.
Research and Development Costs
If you are going to launch a new product, it will cost money to test it and create a marketing plan for it. There will be costs related to focus testing, paying researchers to figure out the best materials to use for a product and costs related to gaining government approval and other necessary licenses.
Loss of Money Due to Shrink
What happens if product spoils on a shelf or an employee tosses away product that could have been sold? Or product loss due to theft, expiring, and damages. While you never want to see inventory thrown away, it does happen from time to time. Planning to lose some money due to shrink is in any business owners best interest.
Knowing what business expenses you are likely to occur can help you with planning out your financial strategy when you plan to start a business.
Tricia Borren is mother and blogger from Beverly Hills.