Even though there are 32.5 million small businesses in the United States today, operating a business in 2022 is not easy. Rising inflation costs and year three of COVID-related hardships have created long-term and short-term challenges for business owners. Good Funding recognizes the challenges small businesses face, which is why provide access to working capital products so business owners can focus on returning to normal. While working capital can be used in any way business owners see fit, some choose to use it for maintaining operating expenses. Operating expenses can vary from industry to industry, but there are some that stand out as budget busters. Here is a round up of the top five most costly operating expenses.
According to the 2021 Paycor State of American Business Survey, 70% of total business costs include employee wages, benefits, and payroll taxes; making labor the most expensive operating cost category for small businesses. The pandemic brought about significant shifts in workforce culture with everything from pay increases to emphasis on additional benefits. According to a recent survey by UpCity, 34% of small businesses increased their employees' pay since the COVID-19 pandemic. In addition, 34% of those surveyed also expanded their health benefit options, Including adding or increasing mental health benefits.
When it comes to reducing wage costs, knowing is the first step. Look for opportunities to maximize scheduling to reduce overtime and overstaffing. If your schedule is already optimized, consider workflow automation. Ask yourself, are there any tasks that could be handled through automation? These are typically tasks that are repeatable, logic-based, and time-consuming. Lastly, remember you are not alone. Labor hardships have plagued almost every industry. Talk to other small business owners and see how they are navigating the current labor market.
Whether you've bought property or are renting an office space, at some point in the past three years, you may have wondered do we need an office with the uptick in remote work? And that is a fair question. Rent and utilities are huge operating expenses. In fact, 38% of those polled downsized their office space as a result of the pandemic. However, for some businesses, having an office, a storefront, or some type of physical space is a non-negotiable. If you find yourself in one of those categories, here are a few tips to help lower your rent and utility costs:
Paying for business insurance is necessary no matter what kind of business you run. Insurance can keep you and your employees insulated from potential damage, theft, and accidents. However, there are multiple types of business insurance, and depending on where you live or your industry, those costs could add up quickly.
Similar to your personal insurance policy, it is important to review your business insurance once a year; any changes in your business can impact the type of policy you need. Speak to your insurance agent to understand what kind of policy you currently have and if there is an opportunity to save. Once you know your coverage, don't be afraid to shop around for the best deal. You can shop online or work with an independent broker to find the best deal. Additionally, look for options to bundle your insurance for even greater savings.
Small business owners have to wear many hats, and sometimes this includes chief marketing officer as well. It was reported that, "Marketing was challenging for small businesses for a long time. However, in 2020, 15% of small businesses struggled with marketing and advertising, a seven percent increase from the previous year.” While business owners know that marketing is required to expand your business, marketing consultants can be costly, with hourly fees ranging from $75 to $500 depending on the service. So, what is the best way to market your business without overspending?
Whether you have money set aside or need to use working capital, there is never a good time for an unexpected repair. Depending on what needs repairing can drastically impact your cash flow and potentially your ability to keep operations running. If you are the type of business that relies heavily on the use of equipment, here are some tips to keep your equipment up and running for as long as possible
Operating expenses are important because they help improve a business's profitability. There may come a time in your journey as a small business owner where you may need a cash infusion and with costs rising across the board, now may be the time to consider a working capital product. During times like these, you can rely on Good Funding's specialists to help find you the funding assistance you need. To apply for funding today, visit us here.