There are many costs associated with doing business, and you just have to include them. But this year, almost all of them are set to rise. Along with the cost of living, business expenses are becoming just as unbearable for companies as home life is for individuals and families. Some of the worst offenders you need to watch out for include the following.
Increased Fuel Costs
The cost of fuel is constantly rising, which is scandalous when you consider the amount of money oil companies make. Just recently, Shell posted profits of over $7 billion in the first three months of 2022 alone. Nonetheless, you are a slave to rising fuel costs as a business necessity. However, you can keep fuel costs a little lower by tracking and using monitored fleet cards like Coast. Fleet card benefits include placing fuel spending limits on individual cards and assigning users. Meaning your employees can’t misuse or overspend when filling up.
Price Hikes Due to Supply Chain Issues
The supply chain issues have been going on for a few years now. And the problems are only getting worse while COVID-19 hasn’t helped. But even before the pandemic, there were impending systematic failures. As a result, some sectors, such as computer chip manufacturers, have suffered. And the burden is passed to the consumer. For instance, the costs of electronics, vehicles, and home entertainment systems have all increased because of chip shortages alone. Getting ahead of supply chain issues isn’t easy. Consider buying in bulk ahead of time.
Business Expenses include Increased Food Prices
You will undoubtedly be aware of the increased food prices worldwide. Even in some developed countries, people are going hungry. According to one survey, over 5 million people are going hungry in the UK alone because of increased food prices. And these increases are passed to your business as well, because you need to eat, as do your employees. It isn’t necessary to feed your employees, but it’s a grand gesture. Even if you don’t, you might need to increase salaries or offer more work so your staff can earn enough to meet more considerable costs.
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Massive Utility Bills
Further to food price increases, utility bills are currently out of control. Massive corporations like oil companies make absurd profits while still charging people unaffordable energy prices. This is presently devastating to billions of people worldwide. Wholesale energy costs were recently increased by more than 60% in one go. And they are set to rise again this coming Autumn. For households, this is worrying. As a business, you might not be able to stay in production. The only way forward is to severely limit how much energy you use in the office.
BONUS: Quick Ways to Reduce Office Costs
There is no one solution for reducing costs in a business. However, there are some quick fixes you can try at the office. Most are pretty straightforward, and you should be doing them anyway. While others require some changes to be made. Try the following for quickly reduced costs:
- Go paperless to reduce paying for paper and printer ink/toner.
- Watch energy usage, so none is wasted by switching off devices and using LEDs.
- Move to smaller premises where the rent is cheaper.
- Use free, open-source software rather than expensive industry-standard packages.
- Use digital communication like VoIP and email rather than paying for phone lines.
Many of these are becoming standard in modern offices that are shifting towards sustainability and green methods. You might not be able to incorporate all of these just yet, but you can begin right away with most, such as reducing paper and ink usage.
Revised Insurance Premiums
As a business, you are required by law to hold specific insurance policies. But not all of them. For example, employer’s liability insurance is a legal requirement that covers employee illness and injury. But everything is optional. But even though other policies are optional, it doesn’t mean you should ignore them. For instance, it’s good to have content insurance if you have expensive items in a store. However, it would help if you considered canceling any insurance you may not need. Like everything else, insurance premiums are increasing this year.
Standard Wage Increases
The cost of living means people need more money to pay for essential things. This burden is passed to the employer as state benefits are reduced, and taxes increase. Go figure! But what this means for your business is that you could be forced to meet rising costs by increasing wages. For example, the UK’s minimum and living wage recently increased to an amount that means an extra £1,000 per year per employee. So a small business with 20 staff members faces an extra £20,000 annually. But, of course, this isn’t sustainable for many SMBs.
Business Expenses Include Payment Processing
Payment processing is vital for modern business. If you aren’t sure what it is, it is simply the middle man that handles payments between a customer and your bank when they pay with something other than cash. For example, your payment processor completes the movement of money from a customer bank when they use a Visa card into your business account. But this isn’t free. In fact, Visa recently increased their prices so much that Amazon was in the final stages of removing Visa from their system. So keep an eye on this for any increased charges.
Packing and Shipping
One of the biggest expenses is packing and shipping. Mainly if you sell products through manufacture or an eCommerce site. And as a good business, you need to balance shipping properly for profit. For instance, the biggest reason for shopping cart abandonment is shipping charges. So, do you offer free shipping at a cost to you or charge customers? Some companies go somewhere in between and include half the price. Others offer free shipping under a certain weight. Note that international shipping has increased by over 50% in the past year.
The many costs of doing business are a challenge sometimes. The slightest change in one calculation can impact the rest of your business. And 2022 is a tough year for increased costs. Some of the expenses you need to watch out for include exorbitant fuel hikes, increased supply chain issues, and shipping costs. However, food and energy bills also affect your company.