How small costs can quickly add up for businesses

The cost of business operations will vary from firm to firm, but the small costs of everyday essentials can quickly mount up, and can spring surprises, new research suggests.


According to insurers AXA, small businesses need to be careful of small expenses when managing their budgets for a new financial year.


With many companies due to reassess their budgets ahead of a March gap, it is essential that they do not underestimate potential costs.


How the costs add mount


Some 13% of businesses said the costs of miscellaneous items such as tea and toilet roll quickly accumulates as do other little essentials.


A further 13% of company owners said the cost of stationary and printer ink came as the biggest shock while 9% admitted phone bills left them stunned.


The cost of postage was named as an issue by 6% of owners, especially given the importance of communication for firms looking to grow rapidly.


Despite voicing concerns over the costs of some items, 32% of bosses admitted that they fail to shop around for the best prices.


The need for change


As a result, many firms could be squandering thousands of pounds every year as they lack the time to check for lower costs or fail to recognise the need to.


For small businesses, salaries are the largest expense for 33% of them, while fuel, materials and stock account for 13%, 12% and 11% of a budget respectively.


Rents and rates for the costs of buildings also take up 10% of the budget, but it is the loss of funds relating to many smaller items that is a cause for concern.


Such losses can eat into any profit and can disrupt the cash flow of a firm, meaning consultation with insolvency practitioners may be required to find the best solutions.


Using this approach should help to streamline a business and ensure that any unnecessary spending is reduced.


Planning for the long-term therefore has many advantages and written into the early budget should be plenty of allowance for the small costs that are easily forgotten.


At the same time, it’s also a fantastic opportunity to consider if there are any options to save.


By Phil Smith


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