If you’re thinking of expanding your business, one of the most important things you need to factor in is the cost. While you’ve likely already considered the obvious costs, such as your new potential business premises, there’s some potential hidden costs you’ll also want to be aware of.
Here, you’ll discover the most common hidden costs many business owners don’t think to factor in to their expansion plan.
The cost of potential losses
You’re expanding your business which means you’re clearly doing well, so why would you need to worry about expansion?
There’s a couple of ways your company could make losses after you’ve expanded including:
- Increased risk of error
- Failing to plan ahead
As you expand your business, you’ll be operating on a much larger scale to what you’re used to. Even if you take on new employees to help deal with the increased growth, it still means there’s an increased risk of error. For example, new staff could make potentially costly admin errors.
Similarly, failing to plan ahead could result in potentially large losses. Have you researched your target market in your new location? Before any business expansion, it’s vital to do as much research as possible to ensure there’s adequate demand, the premises are easy to reach if needed and your proposed budget is enough to cover the additional expenses. This is especially true when it comes to global expansion.
Additional travel costs
Another thing you might not have considered is the additional travel expenses your business could face. If you need to invest in additional business vehicles for example, it could prove to be really expensive.
A good way to combat the extra travel expenses would be to invest in used cars from AA Cars. This would lower the costs by thousands of pounds and also allow you to choose a slightly more luxurious car than you would otherwise be able to afford. Even used cars offer various levels of finance, making them much more accessible to buyers.
Repairs and maintenance
You don’t want to consider the possibility that something could go wrong, but the fact is, if you don’t you could end up facing huge repair and maintenance costs. Whether you’re buying or leasing a new commercial property, it’s vital you take into account potential repair and maintenance costs.
Routine maintenance should also be carried out frequently to ensure any potential problems are picked up on quickly; essentially lowering the cost of the repairs as you’re fixing them before they get worse.
If you need to hire new employees, this is also going to ramp up your costs. However, it’s not just the main salary you need to think about, it’s the cost of the taxes, health insurance, training and other perks that you offer with the job.
The returns may not be immediate either. So, you need to ensure you’re going to have enough cash flow to cover the cost of the new employee until the business adjusts to the expansion.
Overall, there are many hidden costs associated with expanding a business. The above are just some of the important ones to consider.