“Hidden” Costs for Small Business Owners

I am the COO and co-owner of a small business in Texas, which is one of the more favorable locations in this country to own a business. The purchase of Infinite Massage, our chair massage business, produced some hefty costs that event the best of financial planners couldn’t accurately predict.

Don’t get me wrong, we did our due diligence and reviewed their books with a fine-toothed comb prior to purchase. However, as a new business owner who was relocating the business, there were numerous costs that we underestimated. Let’s review a few:

1. Legal Fees: Outside of the purchase price of the business, this was our most significant startup expense. In hindsight, this is a necessary evil for any new business owner. Hopefully you’ll never need these documents, but if you do, they can really save you. And, attorneys (those who know what they are doing) are not cheap.

2. Furniture: Can you spell I-K-E-A? Part of the asset purchase price for us included every tangible asset that the previous business owner owned. Unfortunately, moving desks 1500 miles is counter-productive. We have a limited staff and limited needs, but, these things add up. Establishing a new, functional office with decent furniture can be costly, even if you are bargain shopping.

3. Health Insurance: This one is fairly evident. But, decent health insurance for your family and your employees is costly these days. Just know that this bill comes every month and can be a gut-wrenching check to write. Again, hopefully you don’t need it, but if you do, it better work for you.

4. Employee Perks: This one is something that cannot be avoided in today’s business environment. With tough margins and a competitive marketplace, you better take notice of your employees and provide them with frills that make them feel appreciated. Trust me, finding new qualified individuals to help you run your business is no picnic.

My description of these items as “hidden” is really misleading. I’m not revealing unknown costs in this list. What I am trying to do is let you know that as a potential new business owner, these costs are tangible, significant, and potentially hindering to your success. Don’t forget to factor these things in to your equations when thinking about opening your own shop.

Good luck!