With all the expenses that your service-based small business incurs, there are several additional considerations you may have overlooked when making critical growth decisions. Here are seven overhead cost examples to consider when running your business on a day-to-day basis:
1. Payment Processor Fees
How much you pay in credit card processing fees can vary greatly depending on three factors:
- The type of transactions
- The number of transactions per month
- Which gateways/software you use
Payment processor overhead cost examples can include interchange rates, which are the percentage of the total sale price that the payment processor takes. These interchange rates can be as high as ~3% with popular online processors like Stripe or PayPal. The other often incurred cost to payment processors is their fixed transaction fee, which typically a low amount charged for each transaction processed (such as $0.30 per transaction at Stripe). These fees can add up quickly when your service-based business begins doing a high-volume of sales.
One thing you can do to reduce your processing fees is to find a credit card processor that will work with you to negotiate a lower rate. If you are unsure where to start your negotiation process, you can use a service like Merchant Maverick to help you. Merchant Maverick is a free service that helps you find the best credit card processing partner for your business.
2. Gas Costs
Are you a service-based business, like a window cleaning company, that spends a considerable amount of time driving to and from job sites? If so, you’re probably aware of the impact that gas costs can have on your profit margins. But fear not! There are ways to combat this expense and keep your business thriving.
Firstly, consider incorporating average travel expenses directly into your service prices. This strategy ensures that you’re not taking a hit and taking into account the cost of gas. Secondly, when you’ve built up enough capital, think about investing in a more fuel-efficient vehicle. Not only will this save you money on gas expenses per job, but it’s also a long-term solution that will benefit your business for years to come.
You should also consider using GasBuddy to find good deals for gas in your area.
3. Office Space & Equipment Upgrades
The costs of running a business go beyond just rent or lease payments. Small upgrades, equipment purchases, and other expenses can accumulate significantly over time.
Some overhead cost examples include:
- Furniture: desks, chairs, filing cabinets, etc.
- Technology: computers, computer accessories, printers, additional monitors, etc.
- Equipment: Heavy-duty machinery, tools, special equipment, etc.
- Utilities: Internet, phone, extra power outlets, etc.
- Renovations: Painting, flooring, carpeting, etc.
Some service-based businesses may benefit from having additional equipment rented out as needed instead of purchased outright. Companies like Rent-A-Center offer affordable renting solutions for businesses.
These expenses should also be included with any lease negotiation before signing on the dotted line! Many neglect these details, assuming their internet and phone plans cover all their needs.
4. LLC Filing Fees/Renewal Costs Every Year and Insurance for Office & Equipment
If you’re a sole proprietor or S-Corp, it is likely that your assets are also considered personal assets (such as the office equipment and furniture in your home), which means they aren’t covered by business insurance, leaving you vulnerable to unexpected expenses if something breaks down. To avoid this issue, it’s important to consider insurance coverage within your accrued service-based business expenses.
That being said, there may be benefits of starting or converting to a Limited Liability Company otherwise known as an “LLC” – especially when only operating out of one location – as this would help to protect yourself from liability concerns with equipment used in your home and put a layer of protection between your business and personal assets. It’s always best to consult a lawyer to recommend coverage for your specific businesses’ liability concerns or before choosing your business’s registration type.
Also, consider protecting yourself legally before taking any job; get general liability insurance coverage to provide protection in case accidents or injuries occur. This up-to-date article by Nerdwallet can help you choose a Liability Insurance coverage that fits you business’ needs.
5. Website Building and Management Costs
If you’re using a WordPress-based website, you can be up and running for a low price if you choose the right hosting plan. However, even though most website builders are great options on their own (especially when compared to hiring an expensive designer), there is still additional money required to keep your website up-to-date.
On top of that, you’re missing out on a huge business opportunity if your website isn’t optimized for search engines. And let me tell you, it is not easy to find the right balance between having an eye-pleasing design and getting solid results in Google Search!
That’s where companies like Opasite come in! We help service-based businesses like yours create an awesome website with A+ content, optimized for search engines and ready to convert those visitors into booked appointments.
We keep your website in tip-top shape by providing:
- Endless Content Changes
- Ongoing Website Maintenance & Updates
- Website Backups, Site Security, and Performance Scans
- Continuous Search Engine Optimization Recommendations & Improvements
- Uptime Monitoring & Technical Support
- Site Activity Heatmaps & Visitor Recordings
And all of this and much, much more starting at only $99/mo! No huge upfront costs. No hidden fees. A fantastic Do-It-For-Me website package and more at a fraction of what most companies charge.
If you’re interested in learning more, take a look at our plans and schedule a call, we’d love to discuss how Opasite can help your business!
6. Phone Bills
If you’re not reliably picking up the phone than you’re missing out on lots of customers. Most small business owners have choosen to keep business and personal lives separate with a new business phone and dedicated cell phone line, which can be expensive.If you use a cell phone as a primary business line then it may be time to consider moving over to an all-VoIP (Voice over Internet Protocol) solution for lower rates and more flexibility.
An added benefit is that VoIP providers are much easier to switch from one provider to another since the technology used on these types of networks is standardized across most services. The standardization of calls operating over the internet generally means better reliability than most traditional carriers can offer. This could come in handy if you have several different employees working remotely, in the field, or even out of state/country with no noticeable differences in call quality.
7. Equipment Repair Expenses
Repair costs, while often unavoidable, can significantly impact your bottom line if left un budgeted. It’s a good idea to get service contracts or extended warranties on major equipment like computers, printers, copiers, vehicles, and heavy machinery when possible.
This helps cap repair costs for critical components during the initial years of use. However, for smaller equipment or if service contracts aren’t available, you’ll need to budget for general repair and maintenance.
Create a schedule to regularly inspect equipment, from small tools to large trucks or industrial machines. Note any issues that need attention to avoid further damage down the road. Many repair shops offer affordable routine service visits if you catch problems early. Emergency repairs or breakdowns, on the other hand, tend to cost much more.
Wrapping Up
Many service-based business owners have a tendency to overlook many of the costs associated with running their business. By determining where your business stands for each of the expenses outlined above, you can better understand your bottom line and where your business could be saving money.
Here at Opasite, we understand that the success of your business depends on reducing expenses and keeping profit margins high. This is why we offer our website creation and maintenance services at extremely affordable prices that provide business owners with overwhelming value. We work with businesses in all industries to provide a solution that meets their specific business needs at a price that fits every budget.
If you’re ready to get a website that’ll bring in more revenue while keeping expenses low (and freeing up your time to focus on servicing your customers) then contact us today to schedule your free consultation with a Website Designer!
