A new report from American Express has found that small and medium-sized enterprises (SMEs) spend an average of £1 million ($1,347,635) each on business expenditure every year.
Among the biggest costs a business faces are new staff (24%), paying suppliers (20%), and investing in technology (19%).
But what about the unexpected costs that a business faces? Here’s a rundown of five of the biggest.
Repairs and replacements
Nothing lasts forever, and if your business is reliant on machinery, equipment or vehicles on a daily basis, you can expect to spend a great deal on repairs and replacements.
The best way to mitigate this expense is through regular servicing, maintenance, and upkeep, which doesn’t have to be overly expensive if you enter into long-term service contracts. RAC Business Cover can also ensure any vehicle breakdowns are dealt with swiftly, ensuring you’re back on the road in no time.
Shrinkage
Companies that sell physical products are at risk of suffering from shrinkage, which can result from shoplifting, employee theft, paperwork errors, and employee fraud.
Despite the fact it’s almost impossible to eradicate shrinkage altogether, proactive prevention measures include stronger on-site security, better employee training, and tighter access controls.
Payment times
According to e-invoicing company Tungsten, 12% of the U.K.’s 5.2 million small and medium-sized enterprises still have to wait 90 days or more to get paid by customers. In turn, this forces SMEs to put more in cash reserves or pay higher fees and interest on overdrafts and loans.
Productivity
Anything that interferes with the productivity of an SME could be hugely detrimental to its bottom line. Unfortunately, aspects of the 9-5 such as unnecessary meetings and overwhelming emails continue to have an adverse impact on employee work-rates.
But with just 54 per cent of employees agreeing that their workplace enables them to work productively, SMEs should look to adopt and introduce more efficiency-led environments.
Data protection
Data protection might seem like a difficult issue to overcome, but it’s absolutely imperative to get right in terms of revenue and reputation. Start by training staff before moving onto more specific measures like storing card details and addresses separately.
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