It’s common for small business owners to experience difficulty with cash flow. There are always unexpected payments and expenses that are entirely unavoidable, and without relying on credit options, funding these expenses can cripple the business cash flow quickly. Small business budgeting is essential; as small business bookkeepers, we continually stress the importance of active saving and budgeting for every operational business. We share the expenses that surprise most business owners, helping you to better budget for unexpected payments in advance.
Staff recruitment
Finding new staff requires a considerable budget, more than most small businesses assume. Though you may be lucky to find recruits from social media posts, especially on LinkedIn, most businesses see the need to engage with recruiters and paid job ads, with programs like Seek. The time and resources required to interview and train new staff members need financial consideration, also, as the increased workflow temporarily disrupts the operations of the business.
Staff rewards
Around Christmas, end of year tax time, and close to birthdays, businesses face paying staff rewards and incentives expenses. For most small businesses, these costs don’t fall into the necessary, daily essentials, such as wages and inventory, but are highly essential to staff morale. Paying out agreed bonuses can often surprise businesses, primarily when budgeting for these hasn’t been appropriately implemented into weekly cash flow.
Accounting assistance
External, outsourced services such as small business accounting and bookkeeping are highly necessary, especially around tax time and BAS preparation, yet most businesses neglect to prepare for this expense. The budget required for engaging in accounting assistance is easily forecasted months to years in advance, especially when engaging using the same bookkeeping service each year.
However, the need for particular services can occur unexpectedly. Such services are cleaning, especially for one-off issues, building and damage preparation, and stock purchasing for unexpected inventory lapses. A rainy day fund should help adequately address less predictable expenses, though it can be hard to predict how much to save.
Technology and equipment upgrades
Setting up your business with all of the necessary equipment, like computers and machinery, requires costly start-up finance, in excessive of hundreds and thousands. The assumption this equipment will never need replacing can unravel a business, especially as this technology doesn’t last forever. Your replacement costs can easily double when you need the technology urgently; high use technology like phones, printers and computers can cost significantly for urgent repairs.
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