Business Costs - Pegged!

12 Nov 2018

Business Costs - Pegged!

Advice

Obtaining advice from a financial advisor, accountant or solicitor is often free. Boxing clever by joining a business network such as the Federation of Small Businesses (FSB) might not seem like an essential business expense, but it will save you money in the short and long-term. For a small annual fee (starts at £174 a year) you not only enjoy an element of business insurance but also access to many free and discounted services.

Accountants typically offer a free initial discussion to secure your business for the future. And subscribing to an on-line accounts package such as Kashflow, QuickBooks or Xero means you have a helicopter view summery of how you business is doing at any time.

At a starting cost of around just £8 per month this gives you an easy way to start off, being easy to use and offers freedom and flexibility.

Both you and your accountant can access your accounts when support is needed. Entries can be made by you, a book-keeper or the accountant meaning you have full control of just how much work is done and by whom. Helping to peg costs down and avoiding that shoe box full of receipts you need to enter but never have time for. Simply scan them in to the accounts package via your mobile camera and APP.

Free money-saving advice is invaluable, so take advantage of your circumstances.

Premises

Premises, if you need them, are normally the biggest cost to a new business and one needs to ask - Do I really need premises? Perhaps working from a spare room is preferable and for now “low cost”. Remember…. “Work is something we do and Not a place we go to” .. any more.

Those businesses needing an office lease or rent their space from a commercial landlord in most cases – especially if it’s a retail space Billed quarterly your first bill will be high, and this catches many new businesses off-guard and puts them in to a payment catch up mode from day one.

If you only need an office space, now and again, there’s a little more choice and flexibility. You could, for example, choose to work in a shared office space, such as at Regus – which is often a very affordable and flexible way of starting out.

If you’re working from home, don’t assume that there aren't any costs. You still might need insurance, office furniture and IT equipment, and your utility bills may go up. But then these are additional to any office rental you may pay anyway.

Stock, office equipment/services and tools

Most retail businesses require stock upfront; those businesses that don’t will at least need tools and equipment. If you’re a retailer, your supplier should offer you at least 30 days’ credit. Take advantage of this, and try to negotiate more.

As for equipment and tools, the most common challenge is underestimating the cost. So when you’re doing your financial planning, try to over-compensate.

IT and office equipment, Mobile and Telephony services can be a very costly and a complex exercise. What seems a simple contract and headline low price for things like telephone calls or, in the case of office printers - their low purchase price, can mean paying the equivalent price of a glass of premium champagne per printed sheet for less than 5% coverage!

Find a trusted , knowledgeable supplier for these services and remember that they can be a good source of free consultancy too, before making a decision, especially if you are not fully conversant with technology and costs.

Transport

There are transport costs for every business, but they differ enormously.

At one end of the spectrum, your transport costs might simply be getting a bus to and from an office. At the other end, you may have a car or fleet of vans to purchase, tax and insure.

Above all, you’ll need to compromise. Small businesses have to start small, so consider buying second-hand vehicles and shop around for the very best insurance deals. Often contract hire or rented vehicles can offer best value. Vans can be hired by the day or block of days per month. Meaning you can take advantage of “Pay as you go” or seasonal/monthly use in line with your business needs.

Also consider contract leasing from a specialist (Examples www.vehiclecontracts.co.uk or www.carwow.co.uk) rather than main dealer garages. Often these outlets acquire cars and vans in such quantities the hefty discounts are passed on to the customer often at considerably cheaper than dealer prices.

Legal

Unless you’re setting up as a sole trader, you’ll need to register your business through Companies House. It’s possible to do this yourself, but you may want an intermediary such as your accountant to help.

Depending on your business, this will cost anywhere between one and several hundred pounds.

Insurance

While it’s possible to set up a business without buying insurance, it’s normally essential.

The cost really depends on the type of insurance you need. You should probably insure your premises as well as the contents within it, and you’ll need some sort of liability insurance if you employ anyone or serve the public.

Once again, the key is shopping around. The insurance marketplace is very competitive so you’ll be able to find an excellent deal. Consider using your business bank's contacts and offers, Business Networks such as the FSB or 4Networking, Independent Insurance brokers or a specialist such as Hiscox.

Utilities

Almost all businesses need gas, electricity, water, phone and internet.

Typically, energy bills are a business’ second-biggest expense after staff. And yet most small businesses don’t shop around for a deal outside the ‘big six’ suppliers. Do your homework, and you’ll save hundreds of pounds a year. Or better still use a broker such as www.EnergyBroker.org.uk and let them do the work - it's free and you get the benefit of bulk purchase discounts passed on to you.

Similarly, the major suppliers of phone and broadband tend not to offer preferential deals for small businesses, so it pays to research the market. Again use a technology broker who knows the market and can access the same services corporate organisations use and pass on similar discounts to you. Eg www.cloudsolutions4biz.com

You’ll probably come across our offers – we tend to pass on some of cheapest packages for small businesses and we’re flexible too.

Employment

Employment costs go far beyond salaries.

Recruiting people can be expensive, depending on your method. Then you’ll need to factor in tax, National Insurance and any statutory benefits. They may need uniform or equipment, and you might need to insure them.

So, do your math long before you start posting adverts on job boards.

As a start up, small or family business the flexibility of outsourcing many of these functions to “virtual assistants, PAs or individual HR specialists means you can focus on what you do best and pay for what you use and not what you don’t - whilst keeping costs down.

Marketing

You’ll almost certainly need a website.

Websites can be built for free, but for most businesses they require considerable investment – especially if you’re taking orders through your site. You’ll probably need to pay a monthly or annual fee to host your site, and design costs can vary wildly.

Once again, it’s worth compromising where possible. Many retailers, for example, base their online presence exclusively on social networks to begin with.

The general thought is facebook for B2C (Business to Consumer) sales although this is beginning to change to include B2B (Business to Business). Linked-In tends to be focused more on B2B sales, Twitter is used for both whilst others are generally vertical market led.

Then there’s advertising, either online or offline. Will you need brochures, leaflets, flyers and posters? Will you need to pay for press advertising? Will you instead focus on pay-per-click advertising to boost your Google ranking?

Judging what return you’ll get from investment in advertising is difficult for any business, but especially a new one. So start cautiously, and be creative about your marketing – some of the world’s most successful businesses started out with no advertising budget whatsoever.

And do make sure you are available to your customers. Don't "hide" behind websites without prominent contact numbers and Voice Mail with poor quality messages. These days customers want to be able to talk, text, eMail and WebChat with you - Make it easy to do business with you.

You

A lot of entrepreneurs take a significant pay cut when they take the plunge and start their own business. But you need to work out precisely how much money you need to get by.

Personal savings rarely survive the process of setting up a business, so try to ensure that your business plan accounts for your own wage – even if it’s relatively low.

Release the stress and strain

As a technology broker and advisor of 30 years we can take some of the pressure off starting a business away by finding the best value deals on the essentials: Mobile, broadband, phone, IT, gas, electricity, water and human resources (Virtual services).

Even more importantly we take in to account your business aspirations, need for flexibility and minimal contractual commitment

Ask about our latest offers to keep your costs low.

OR

Call us for a chat .. 0330 6600464 (option 1)