When starting a business, many people consider the costs of equipment, rental and employees but they forget about some of the hidden costs in a small to medium enterprise (SME). The hidden costs of a small business are:

Equipment repairs and replacements

After a year of business, some of your equipment will need to be repaired. You may also need to buy more stationery for your office. Furthermore, you may want to look in to upgrading your IT. These are all costs that your business would need to handle.

Employee perks and tax

When setting up the budget for how much to pay your employees don’t forget to consider the cost of perks like health insurance, vacation time and retirement. You will also need to look at employee’s tax and workers’ compensation which you will need to pay.


This refers to the loss your business may experience through employee theft, shoplifting, paperwork errors, and vendor fraud. You can minimize the effect of some of the losses but you will experience a few losses which you need to take heed of before they eat into your bottom line.

Delay in payments

Customers may delay payments due to cash flow issues of their own, or they just forgot about the outstanding bill. Then when they eventually pay the bank holds the payment before releasing it or there is a public holiday which prevents the payment for being processed. The other side of the coin is if you delay payments to your suppliers. This is a dangerous game to play as your supplier may be aware that you always delay payments and up the price for you or they will be less than willing to help you when you are in a crisis. Therefore, for your reputation and cash flow make sure you make payments on time.


Every year it is good to review the subscriptions you have to different organizations, licenses and memberships. If there are ones which are no longer valid then you may consider cancelling them.


Unnecessary meetings, email overload and anything which interferes with your employee’s productivity can cause your company to endure a cost. It is important to be organized so that you can get to where you want to be. If you have employees or equipment which is idle, then this is a cost to the company.

Cost of risk

You may get an opportunity which looks golden. You know that you may be stretching your resources to accomplish the job but it seems like the opportunity could be too good to be true. Be careful, if the risk is very high it could end up costing you more than the potential profit you will make on the project. Take calculated risks otherwise you may end up making a loss.


Your time is important. You need to ensure that you spend it on growing your business and working on the various aspects of it. Be careful to waste time as every minute wasted, is money wasted. If you are not working on your business during working hours, then you are a cost to the business. So ensure that the tasks you are involved in are worth your time and money.

By consider these eight hidden costs of SMEs you will be well on way to creating a profitable business.

Proudly brought to you by the NSBC.

Published On: January 22nd, 2018 / Categories: Small Medium Enterprise (SME) / Tags: , /

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