18% of businesses fail in the first year according to LendingTree. By year 10, over 65% of businesses have failed. As a business, the odds are stacked against you; something we’re sure crosses your mind often.
With the possibility of failure looming, you must maintain a grasp on all aspects of your business’s profitability. When one slips, your whole business is at risk.
It’s a good idea to develop strategies that give your business the best chances of staying in the green.
Budgeting for Unplanned Expenses
The success of your business depends on your ability to drive revenue and manage expenses. Among the top expenses responsible for taking a business’s P&L into the red:
- Price Strategy
- Too much overhead
- Unexpected, unseen, unheard costs
Being the optimistic business owner you are, we can understand why it might be easier to focus on the expenses that are going to make your business money like equipment or real estate. We’re not here to make you a pessimist, we’re just as hopeful as you are that everything goes according to budget, but we do suggest you spend some time considering these unexpected expenses.
Corporate taxes get complicated fast, even if you’re a smaller business. Do your research or work with professionals who know what taxes to factor into your business’ profitability model, or you could be in for a rude awakening come tax season when you find out you’re not as green as you thought you were.
Sure, you’ve accounted for rent in your budget but depending on the size and location of your business, you could easily end up paying hundreds a month in internet costs plus electricity, phone services, water, janitorial services, and gas. And it’s the seasonal increases of some utilities and the years where prices trend higher than others that often catch business owners off guard.
Human capital is expensive, especially if you’re hiring full-time employees so almost all business owners try to get away with hiring as few people as possible to start. All it takes is an increase in customer needs for you to scramble for new resources which can become costly. A cost you could have prepared for with forecasting.
Emergency Repairs or Replacements
If you think about it, there are an infinite number of things that can go wrong with your business. They aren’t necessarily expenses you can predict or anticipate – so when they come up, they can throw a loop in an otherwise sound budget.
It’s a good idea to leave a little wiggle room for general emergencies so you’re prepared for anything that could come up.
Crime Could Have More Impact Than an Unexpected Repair Cost
One way to prevent emergency repairs or replacement expenses and their greater impact on your profits is security.
As strange as it may sound, if you ask us, it’s a no-brainer! If your business becomes the target of a property crime or theft incident, you could lose the revenue aspect of your profitability equation overnight.
Even if you have set aside dollars for possible property theft or damage, the cost is almost always greater than expected and can impact profitability in more than one way. Plus, imagine how much more profitable you could make your business if you didn’t have to throw money at theft or damage that was preventable.
Here are a few examples of the impact property crime can have on a business’s profits.
You’re a business whose revenue comes from renting trucks. You’ve budgeted for everything this year and it feels like it might pay off at the end of the year until one night the catalytic converters are taken from your trucks and immediately your revenue stops until you can purchase new ones and have them repaired. That is if the parts are in stock with current supply chain issues.
You run a warehouse and have a team of employees who work day and night to produce products. One night, your employee’s cars are all broken into leaving them without their items and frightened, rightly so. Your employees begin looking for safer workplace conditions and you can’t produce the same volume of product you once did.
You operate a storage facility and your business’ reputation helps to keep return customers and attract new customers. When a group of unwelcome individuals makes their way onto your property and word gets around, your customers decide to take their business (and referrals) somewhere with better security.
If an indent like this happens to you, you don’t want to regret not making security a high-priority expense in the first place. We know because we’ve heard it before.
Perimeter Security as a Service
Have you heard of our security as a service model? It’s one of the reasons our customers love us.
You could pull from your CapEx funds to install a large perimeter chain-linked fence with scary-looking barbed wire that a criminal will inevitably cut through, or cameras to catch photos of criminals that will need to be updated in a few years.
Or you could budget within your OpEx funds to partner with a security service that will install and maintain a no-up-front cost, solar-powered electric fence. Sound too good to be true?
Learn more about the threats against your specific business with a custom Threat Assessment.
Or to hear the ways AMAROK can ensure you maintain a profitable business and beat the odds.