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The hidden costs involved in running a business

  • Highlights

  • Inventory theft and employee benefits are often ignored

  • Factor in the cost of training and hiring employees

  • Untimely machine maintenance can add to costs

  • Use a business loan to fulfil gaps in working capital

Running your own business is exciting and fulfilling, but this experience can quickly turn on its head if you are not careful with expenses incurred. Ensure you have thought about unforeseen expenses and have enough financial resources to meet unexpected expenses.
Understanding the costs and calculating expected income is the obvious first step as you step into an entrepreneur’s shoes. However, every business can throw up some unexpected costs which you need to plan for. <>BR? Keep hidden costs such as these in mind.

Inventory shrinkage:

The term refers to the loss of material between purchase by your business and sale to your customer. Typically, it implies theft by employees. This causes a huge loss to your business, but may be controlled by better monitoring of the storage facilities. Install CCTV cameras and add security within and at entry and exit points. Use an affordable business loan with a Flexi Loan facility to pay for these expenses.

Training the staff against theft and promoting theft detection can also help to reduce inventory shrinkage.

Employee recruitment and training:

A stable workforce is every business owner’s dream, but this seldom comes true. Constantly hiring new employees means that you will spend considerable time and money to train the new recruits in the functioning of your business systems and nuances. Every time an employee resigns and a new person is hired, there is a lot of paperwork to be done. This means another employee must forgo his job and focus on maintaining records.

Employee benefits and tax:

Apart from salaries, there are many employee benefits such as PF and ESI costs, which business owners tend to overlook. These statutory payments need to be made monthly and heavy penalties are imposed on default. You need to build this cost into your business plan.

Legal and accounting fees:

With all the licenses and approvals required to run a business, you will need a good hands-on lawyer and a qualified accountant to help you find your way through this maze. An accountant is also required on a daily to enable you to maintain the books of accounts, to make regulatory filings, etc. This additional expense is unavoidable but necessary.

How To Get Small Business Finance From Bajaj Finserv

Dos and Don’ts when applying for a Business Loan

Business loans from Bajaj Finserv are designed specially to help growing businesses meet their financial requirements. Easy to apply for and hassle-free to avail, these loans come with several unique benefits that make them the ideal mode of business finance for small and medium sized enterprises. However, when applying for a business loan, there are certain dos and don’ts that you should keep in mind, in order to ensure that your application is processed smoothly. Here, we tell you what they are.

Dos and Don’ts when applying for a Business Loan

Premature repairs and replacements:

Equipment, whether new or used, is bound to need repairs from time to time. Such breakdowns need to be addressed promptly. These unexpected expenses are typically overlooked in a business plan or in a monthly budget. Taking an Annual Maintenance Contract [AMC] for machinery is essential as it ensures that the critical machinery is checked for potential problems at regular intervals avoiding unforeseen stoppages. You can also take a customised Machinery Loan to access finances in a timely manner to buy, repair or upgrade your machinery

When making your business plan, keep a 5–10% margin to fund these unexpected expenses. As a fail-safe, you can keep the additional funds invested so you can earn a return when they are idle.

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