Your business expenses can vary wildly from month to month. Some will be fixed, sure, but some are going to cost you more here and there than you’re used to. Understanding that is one of the core components of running a business in 2024. But what else should you know from day one about your cash flow? Here are the points to keep in mind as you build upwards.
Equipment is Rarely a One Time Cost
You buy it once, it’s yours and won’t ever break down, right? Not in the modern age. A lot of specialist business equipment, as well as software, are run on subscription models these days. Even your printer is at risk here – companies such as HP run an ink delivery based on when your model signals that it’s running low. Buying your own ink to replace it could even ping back a warning! As such, that’s another ongoing cost you should factor into your accounts.
It Might Take a Long Time to Get Paid
Even when you send an invoice on time, and you’re used to them getting paid within a day or two, there’s always going to be a client who takes an age to respond to you. Sometimes they might not even pay at all, and ignore your attempts to reach out to them entirely.
That’s where the double cost comes in. You may need to hire the best debt collectors you can find to get this certain invoice paid, or you may need to let it go, if the amount of money is insignificant or the person who owes you cannot be found. Always have this possibility in the back of your head and plan your future payment methods accordingly.
Insurance Policies Have Very Specific Terms
And you should always read the small print before signing on the dotted line. Otherwise you may get into a situation where you need insurance to sort things out, but the policy you’ve signed into existence doesn’t cover you for it. Your office being burgled, for example, or needing to take time off as a result of illness. Always check the terms and see if they expand to cover enough of the instances that could affect your business. Otherwise, you’re likely to see a big bill headed your way when something goes wrong.
Loans Need Paying Off ASAP
If you’ve taken one out in order to establish your business, clear it as soon as you’re able to. Focus most of your attention here in your first year. It’ll make all the difference to your bottom line. Why? The less time spent collecting this interest, the more liberated your finances will become. That’s good news for any business, but for a small business, it’s the difference between 5 year survival and 1 year destruction.
If you don’t understand your business expenses now, it’ll be hard to control them later on. Keep this in mind, and use the tips above to stay on track.
