When you initially wrote your business plan you will no doubt have factored in your start-up costs. These will have included the cost of premises, equipment, staff, vehicles, marketing and supplies. What you may not have accounted for is all of the likely monthly outgoings that you will need going forward. Some things may not even have occurred to you and you may be uncovering costs as you go but you may have had a clear picture from the start and worked these into your turnover projections. Have you factored in your future growth plans and what investment will be needed to achieve these?
There may be some costs you just don’t foresee and there will undoubtedly be bills that present themselves when you least expect it. For small businesses who are working to a budget these can be hard to plan for so how do you plan for all eventualities?
- Work out the monthly outgoings that are regular and planned for. These will be costs like staff, premises, vehicles etc.
- Ensure you are putting enough aside for your tax bill. Seek advice from an accountant and ensure you know, based on your projected turnover, what your tax bill is likely to be.
- Make a list of future investments that you plan to make in the future in order of priority. You may want a new computer system or a bigger van. These are the things on your wish list rather than your list of necessities.
- Ensure you have a “rainy day fund” or an emergency fund for any repairs, costs that you haven’t planned for etc.
- Consider even the smaller insignificant bills – monthly insurance for your phone, computer etc. They may be small but they soon add up.
- Plan your marketing budget – this can be a huge cost for some businesses so it is important to allocate accordingly. As a rule of thumb traditionally businesses were recommended allocating 4% to turnover to marketing and advertising.
- Investment in the future should be something that you are considering. You may be in the early stages of your business and just finding your feet but it is still important to plan for future growth. What does this look like and what will you need? It may be that you need to hire more staff or lease more equipment.
This list is just to give you an idea of the costs involved and the costs that you should plan for and is by no means exhaustive. Only you will know your own business, how much it costs to run and what it will cost to grow. It is important to take time to work out and analyse your costs. Once you have a clear picture of everything you can begin to see a clear picture of your profit. After all that is the bottom line for any business.