The True Cost of Starting and Running a Business
Many business owners are surprised to learn that there are many hidden costs to running a business. Unfortunately they most likely learn about these additional costs after they experience the frustration of managing their business day-to-day. Here is our detailed list of both the obvious and hidden cost to running a business. Business owners and company executives must develop strategies to deal with each of these cost issues to avoid wasting financial resources.
Understanding the True Costs of Running a Business
VISIBLE COSTS
•
Salaries•
Benefits•
Overtime• Customer Complaints
• Consultants
• Special Overhead Costs
• Equipment Costs
• Maintenance Costs
• Inventory and Supplies
HIDDEN COSTS
• Lack of Employee Motivation
• Excessive Employee Turnover
• Lack of Clear Business Purpose and Strategy
• Sick Pay
• Ineffective Employee Relations
• Lack of Clear and Consistent Policies and Procedures
• Training and Developing Administrative Errors
• Billing Errors
• Theft
• Disability Pay
• Waste
• Poor Processes
• Inadequate Staffing or Overstaffing
• Ineffective Performance Management
• Inefficient Systems (Management and Operational)
• Low Productivity
• Grievances
• High Account Receivable
• Equipment Downtime
• Lack of Proper Equipment
• Injuries
• Employee Frustration
• Ineffective Public Relations
• Lack of Clear Vision and Mission
• High Insurance Costs (Worker’s Comp)
• Lost Customers
• Inadequate Staff Development
• Poor Internal Communications
• Fear of Litigation
• Low Inventory Turnover
• Distribution Delays
• Lack of Technical Skills
• Poor Image in the Market Place
• Management Frustration
• Owner/Investor Frustration
• Poor Management Practices!!!
How much are hidden costs it costing you?
Last Week's Poll Results:
| How do you regard the H.R. function in your company? | |
| Answer | Response |
| Ratio | |
|
Very helpful |
31% |
|
Somewhat helpful |
15% |
|
H.R. who |
54% |
| Total | 100% |
More than 54% are wondering about H.R. in their companies.
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