Hidden Costs That Impact Startup Businesses

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In the context of ease of doing business, India’s ranking has improved significantly. Today, India is an ideal destination for doing business where there are immense opportunities for the growth of the business. In addition, favorable startup policies, easy business loan for startups and affordable legal services for business are some encouraging factors, which are making running business fulfilling and rewarding experience. However, while running a business there are several hidden costs that often go unnoticed. This blog aims to highlight hidden costs that impact startup businesses.

Hidden Costs of Running Startup Businesses

Licenses and Permits:

Licenses and permits are essential to run a startup business in India. According to the nature of the business, imperative to obtain multiple licenses from different authorities. These licenses and permits have certain cost that can add up over time. In case, if you fail to obtain required licenses and permits for your business that can result in fines and penalties, which can be even more expensive. Therefore, before starting business imperative to acquire proper knowledge of business domain and understanding of license and permits for smooth functioning of the business. In addition, make sure to track expiration dates of your licenses and renew them to avoid any penalties.

Legal Fees:

From trademark registration, company registration to GST registration; there is a great significance of legal services for business. Apart from that, from drafting contracts to dealing with legal disputes, legal services prove helpful for business and this is where legal fees come as hidden cost for the business. To manage legal fees, hire a business lawyer from top law firm who provides affordable legal services for business.

Employee Turnover:

Employee turnover is another hidden cost that is often overlooked by business owners. For startup businesses hiring and training new employees can be time-consuming and expensive. This hiring and firing policy decreases productivity and morale of employee that ultimately impacts functioning of the businesses. To manage employee turnover cost, companies should work on employee retention strategies such as competitive salaries, benefits, and a positive work environment. Conducting exit interview is strongly recommended here, thereby companies can understand why employees are leaving and take steps to address any issues.

Marketing and Advertising Cost:

Undoubtedly, there is a great significance of marketing and advertisement for the growth of the business. But for startup businesses that have limited marketing budget, cannot spend massive amount on marketing and promotion. In this scenario, to manage marketing and advertising cost companies should focus on cost-effective strategies such as social media marketing, email marketing, and search engine optimization. Here collaboration with other businesses or influencers is strongly recommend to reach a wider audience.

Payment processing Fees:

Payment processing fees are another hidden cost of running startup businesses. Payment processor companies charge a fee for each transaction, which can add up over time. In addition, some companies have opaque polices where they may charge hidden fees such as chargeback fees or monthly fees. Therefore, to manage payment processing fees, compare different payment processors to find the most affordable option. Some payment processing companies offer substantial discount or reduced fees for businesses that process a large volume of transactions. Make sure to read term and condition carefully to avoid any hidden fees.

Taxes and Accounting:

Companies often overlook the spending on taxes and accounting, these two are essential components of businesses that need to be observed meticulously. Managing taxes and accounting are complicated and time-consuming task. Hiring accounting and tax expert are quite expensive, but failing to manage taxes and accounting accurately can result in penalties. To manage taxes and accounting cost, using advanced accounting software for business can be an effective step that automates many of the tasks. Additionally, make sure to track all expenses and revenues for accurate tax filing and if require hire a tax professional to ensure compliance with all tax regulations.

Technology Costs:

Technology cost is one of the important spending by companies that often goes unnoticed. From upfront technology costs like computers, cell phones, and custom data entry software cost to ongoing technology costs like software licenses business owners spend substantial amount. In addition, equipment maintenance, replacementof equipments and upgradation of hardware and software are significant technology costs for startup businesses.

Cyber Security and Website Maintenance Cost:

Startup businesses are vulnerable to cyber attacks therefore essential to protect it from any cyber threat. This is where significance of cyber security comes into the picture. Business owners often spend substantial amount on firewalls, antivirus software that often goes unnoticed. In addition, if business has a website, then imperative to pay for website development and maintenance. These are costs, which add up over time and need to manage efficiently.

Conclusion:

Apart from above, some hidden costs of running startup businesses are insurance costs, energy costs, surety bonds and unplanned expenses. Business owners who manage these costs, profit of the business enhances substantially and achieve long-term success. Here, hiring a business lawyer from top law firm is strongly recommend for valuable legal advices that will help business owners to stay informed and to take a proactive approach to manage costs for long term success of startup businesses.

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