6 Unexpected Costs of Running a Business (and How to Prepare)

At the end of the day, businesses are about making more money than they spend. While some mega companies receive what seems like unlimited funding, your small business probably isn’t in that situation just yet. This means that you need to account for all expenditures. Keeping costs down is one of the best ways to ensure the financial future of your company. Here are six unexpected costs of running a business.

Employee Turnover

You probably wouldn’t hire someone if you thought they would be gone in six months. However, this is a huge issue for businesses of all types and sizes. You generally want to keep your annual employee turnover rate at 15 percent or lower. This is about the national average for the U.S. A higher rate than this can lead your business to experience deficiencies and a lack of identity. It can cost a lot to lose an employee. You lose productivity, and will then need to spend time and money hiring and training someone new. Lower turnover by making your company desirable. Benefits like health insurance and paid time off will keep people at your company.

Legal Costs and Insurance

You need to factor legal costs and insurance into your financial plans. There are various ways legal expenses can drive up your company’s bills. For example, a copyright infringement case can be extremely costly depending on the circumstances. Various types of business insurance can protect you from a lot of forms of lawsuits. For example, workers’ compensation will protect your business if someone gets hurt on the job. And general liability insurance is typically required for anyone who is leasing a commercial space. Pay attention to the potential costs associated with legal fees and insurance.

Property Costs

An online-only presence is becoming more prevalent in a lot of industries. However, most kinds of businesses still require some sort of physical presence. Commercial space will be a major cost for your company. Despite this, many business owners overlook this seemingly obvious expense. You need to decide if it makes better fiscal sense. Should you buy or rent your property? Purchasing can be a better long-term investment if the land appreciates. However, renting is much less of a cost in the short term.

Cost of Growth

Many business owners only think of increasing revenues when they think about growing their company. Unfortunately, this isn’t the only way your cash flows will change during periods of expansion. You will likely also have to spend more money in order to facilitate this growth. This might require additional debt. Make sure you have a plan in place for paying to scale your business.


The utilities for your home might not cost you too much. However, they will be a lot more expensive in a 30,000 square-foot warehouse. Get an estimated utility statement before you move into a new commercial space. Failing to account for this can lead to massive, unexpected bills down the line. 

Premium Hires

You want to be the best at what you do. In order to accomplish that, you need to surround yourself with the best people. The problem is that these individuals often know their inherent worth. Top-quality employees are going to ask for an above-market rate salary. You should account for this by creating high-end estimated salary expectations. By factoring this extra money into your budget, you will be able to afford premium hires.

There’s no way to account for every single unexpected cost. It’s wise to keep some emergency money just in case something completely unpredictable happens to your company. In the meantime, account for these six often unexpected costs of running a business.