BIZ SAVVY:
It’s one of the most satisfying experiences you’ll ever have: the freedom of being your own boss – it’s priceless. And being aware of potential money issues beforehand can make it easier for you to put the flow in cash flow!
The hidden costs of starting your own business
EMPLOYEES
As your business grows, you’ll need to hire staff to help you out. But remember, even if you pay someone R10 000 a month, that’s not the true cost. As a rule of thumb you should expect your employee to cost you 25–30% on top of a base salary each year.
That’s for fixed costs such as taxes, unemployment insurance (UIF), uniforms, training courses, paid time off and perks (for example, a staff discount for your product) or entertainment like monthly drinks. There are also soft costs like recruitment fees and the time and tools required to train staff. It can come to a lot more than you think!
CONSULTANTS
It’s great to do your own marketing and taxes, but you might find that it takes up more time than you can afford.
Professional services, however, come at a price, so remember to budget for marketing/social media services as well as for your IT provider, recruitment consultant, accountant and tax specialist. You just can’t do it all yourself. You’ll also need to allow for banking and legal fees.
MAINTENANCE
Put away a fair bit of money for unforeseen maintenance to your premises, machinery or computers. From leaking roofs and a broken air conditioner to losing all your files to a virus or weather damage to your signage, you never know what bad luck might next befall you. If you rely on machinery, you also need to factor servicing and repairs into your budget.
Spending money on a regular service to keep equipment in good condition is a better way to manage costs than having to buy new equipment. Also, protect yourself by getting insurance cover that includes business interruption and machinery breakdown.
TAXES
Don’t be caught off guard with a huge tax or VAT bill. You need a professional to make sure you comply with SARS regulations and that you put away enough money each month to be able to pay what you owe. Also, get good advice on your responsibilities as an employer – you’ll need to register with UIF and pay any relevant union fees.
TECHNOLOGY
Cloud storage, software licences, computer accessories, domain name fees, hosting… the list goes on. All businesses rely heavily on being online, so be sure to put money aside to keep your infrastructure ticking over.
INSURANCE
Insurance is one of the most important expenses. As a bare minimum, you’ll need employer and public liability coverage.
It’s also advisable to take out business interruption insurance, protect your property and stock against fire and flooding, and cover business vehicles. It seems like a lot to take on, but it really is an absolute necessity for the smooth running of your business and your peace of mind. Good luck – and keep going!
SHEHNAZ SOMERS IS HEAD OF COMMERCIAL UNDERWRITING AT SANTAM