The First Five Years of Business: Where The Money Really Goes

Anyone who has ever maintained their own business for five years or longer will have come across a strange phenomenon whereby the money just seems to disappear. Even if you happen to be turning a profit, you might well take a look at your current budget and your first ever budget, and start to notice some problems. This is very common, but that doesn’t mean that you shouldn’t be trying to overcome it. In this post, we will look at just where it is that the money tends to go, and what you can do to patch up those holes.

Equipment Maintenance

Most people simply underestimate just how much it costs to keep most items of equipment going for more than a year at a time. Whether you are running a bank of computers in an office or a factory floor full of various kinds of machinery, you need to keep on top of all of the maintenance of all of it – and that is always going to cost you some money. As long as you have budgeted for this, it’s no problem, but if you forget to do that then you might find it comes as a nasty surprise.

Theft

Unfortunately, even in the most highly trusted workforces there is always going to be the occasional theft from within the premises. You need to hire carefully, train your staff so they appreciate there will be consequences of stealing, and do all you can to stop theft from outside too. That means having full-on fire rated shutters, the kind that nobody can simply cut or burn through, and putting up security cameras around the place too. Do all you can to prevent theft, and your budget will thank you for it.

Fluctuating Investments
Many businesses rely on a number of investments to keep afloat. While this is fairly common practice, and it can actually be a very useful idea indeed, you should be aware that your investments can go below your price as well as above it. That means you could end up owing money, or merely not having as much as you would have hoped. You need to diversify, not rely entirely on investments to keep the business going, and be sure to keep an eye on the markets you have invested in, so you know when to pull out where necessary.

Initial Overheads

It does take a while for a business to start turning a profit, even if it is a successful one. While five year would be a long time to go without a profit, it is not unheard of, and you need to make sure that you are doing all you can to keep it as profitable as possible. That includes looking at the overheads you are paying out, as these are always going to be high against your income at first, and anything you can do to lower them is going to be a good idea. As long as you have done that, you should find that your business significantly improves.