The rush that accompanies the rapid growth of your startup or business is incredible.
However, despite the fact that your business is booming, you have to be aware of the hidden costs that come with growth.
In this blog post, we’ll be talking about what those hidden costs are so you can anticipate them in advance.
Office Space or Store
When your startup starts to grow rapidly, you’ll have to get a bigger office or store, which can be very expensive.
Since you’re now running a larger operation, your costs will rise overnight. In addition to an increase in rent, you’ll have to account for greater utility and building operations costs.
If you don’t want to be overwhelmed with increases, start tracking your monthly spending on real-estate the moment you move in and implement solutions to control your utilities.
Office maintenance and repairs are a major source of hidden costs that booming startups can experience.
You can easily miscalculate or underestimate the actual costs of maintaining a space, especially if the facilities in question have some inherent flaws that need constant repairing.
Since office maintenance can be very costly, go over the rent terms and clearly establish which fees you are responsible for.
According to a study by JustBusiness, office space costs for startups can amount to as much as $1000 per employee per month.
If you rapidly increase your staff’s number, you’ll need a larger space to take them all in. Upgrading to a large office can skyrocket your operation costs.
As your startup grows, you should prepare your budget for new, hidden costs of a large office space or store.
Hiring More Team Members
Hiring more team members also entails hidden expenses that can prove costly for your rapidly growing startup.
When hiring multiple new team members, your startup will have onboarding costs that are easy to miss but can be quite a drain on your resources.
Onboarding will cause your department heads to switch between tasks and extend responsibilities.
The longer the onboarding lasts, they’ll be less productive at their positions, and that will cost you money. You have to anticipate those expenses.
One of the hidden costs of hiring more team members is the increased risk of employee turnover.
When an employee leaves the company, you lose the time and money invested in training the employee.
You also have to face the onboarding and training of new employees. Employee turnover can be a hidden cost that growing startups are often not aware of.
According to the US Bureau of labor statistics, the average employee stays at his or her workspace for 4.4 years before switching to a new employer.
Having to rotate the majority of your staff every 4 years can be costly for your business as you are hiring more employees, the risk of turnover increases.
Hiring often involves hidden costs that startup owners should consider carefully.
Risk of Overload
If your startup is booming, you need to be prepared for the hidden costs of an overloaded workforce.
Workplace overload often happens during a startup’s phase of rapid growth.
Since your business demands rise, employees often have to work extra hours until new staff members are onboarded.
An overloaded workforce is more likely to underperform in their tasks, which can be very harmful to your business in this phase.
You should prepare your workforce for the possibility of facing overload and figure out how best to avoid it.
The greatest cost of this is employee burnout.
Employee burnout occurs when an employee is completely exhausted from work and eventually loses motivation to perform their tasks.
If your employees burn out, your startup will have additional costs that can damage its growth. You need to tread carefully as your work demand starts to boom.
Gallup’s survey found that 23% of surveyed full-time workers often feel burnt out and 44% report feeling that way sometimes.
This means that a large part of the surveyed workforce regularly deals with low performance and motivation issues that feel burnt out.
Burnout is a widespread workspace issue, and businesses should address it.
Rapidly growing startups should be aware of the hidden costs of an overloaded workspace.
Taxes and Benefits
When you hire new employees, taxes and benefits can increase your expenses for their salaries.
The costs of taxes can greatly increase your monthly spending.
If you’re not fully aware of the expenses, you’ll have to cover them. You could end up spending a lot more money than you anticipated. This can hurt your growth if you are hiring multiple new staff members.
To be aware of taxes that come with hiring, you should discuss it with your accountant.
Hiring new employees increases your monthly costs for employee benefits.
If you’re planning on hiring employees for multiple departments, it might cause your monthly costs to grow rapidly.
Before you jump to hiring new staff members, you have to consider the cost of the benefits that will accompany them.
A study by Zenefits has found that the average cost for employers paying for benefits is $11.82 per hour that adds to their basic salary.
Employees pay for benefits such as paid leave, legally required benefits, retirement, and insurance. Paid benefits can put additional stress on the company’s salary budget.
Hiring new employees always come with additional costs in the form of taxes and benefits.
Equipment and Tools
As your business is growing quickly, you’ll have to invest large sums of money in specialized equipment so you can keep up with the demands of your new clients.
If you don’t track your equipment, your resources will be depleted more rapidly.
To ensure you’re only investing in equipment with good ROI, you have to track how profitable your new asset is.
Tracking asset profitability relies on using a software solution that monitors how often the tool or asset is circulating.
Understanding the basics of asset tracking will help you pick the right solution for tracking asset profitability.
This way, you’ll know if a purchase was profitable and minimize future investment costs.
Acquiring new tools and equipment often involves hidden maintenance costs.
If you don’t regularly check up on your assets’ condition, their maintenance costs will rise.
Since the maintenance of new tools can be quite expensive, you should implement a tracking solution to ensure your gear stays in great shape.
According to a Reliability study, on average, asset maintenance takes up between 40 and 50% of a company’s operational costs budget.
Businesses spend large sums reacting to maintenance issues instead of preventing them.
Asset maintenance involves hidden costs that should be managed.
Managing the hidden costs of obtaining new equipment and tools is a major challenge for booming businesses.
In this post, we’ve talked about the hidden costs that often occur with rapid growth.
Not anticipating these costs can cause you to underestimate your operations’ total costs and hurt your growth phase.
As your business grows, practice extreme caution and do your best to include every possible expense that your business could face so that you can stay in control of your budget and spending.
Our Guest Contributor:
Ashley Wilson is a content creator writing about business and tech. She has been known to reference movies in casual conversation and enjoys baking homemade treats for her husband and their two felines, Lady and Gaga. You can get in touch with Ashley via Twitter.