Global business sentiment has taken something of a hit recently, thanks primarily to the re-emerging spectre of Brexit and its immense implications for Europe and the Western world. While confidence had rebounded after the initial fall-out from the referendum vote, the decision of British PM Theresa May to announce an official time-line for Brexit has had an impact on businesses and markets across the globe.
For small businesses, the issue is even more pronounced. With many loathe to invest in their growth in such a volatile climate, there is a danger that independent firms and start-ups (which remain key economic engines in the modern age) will stagnate and trigger another global recession. For those that do decide to invest, they are likely to prioritise either risk-averse or immediately obvious expenses that deliver an instant return.
The Hidden Business Costs that Underpin Long-term Growth
While this is all well and good, it ignores many of the underlying business costs that are central to long-term growth. These expenses lay the foundation for a sustainable and profitable venture, which is crucial both for individual entrepreneurs and the global economy as a whole.
So, what are these business costs and why are they important? Consider the following: –
- Human Resources
Investing in your companies human resources is central to long-term success, as this creates a welcoming environment that enables you to both retain and attract top industry talent.
It also goes beyond this, however, by reducing operational costs over time. This is because it is far more cost-effective to invest in the development of your employees and expand their skill-sets, rather than triggering a high-turnover of staff by constantly pursuing established candidates. This taps into the notion that retaining customers is cheaper than acquiring them, and the same principle can be applied to the management of human resources.
So while the concept of investing in people may seem little more than generic business jargon, it is in fact hides an important business cost that can help your venture to grow.
- The Development of a Company Culture
To some, the idea of creating a company culture is also an example of idealistic (but impractical) business theory at its best. In fact, this is considered to be central to a successful and viable business, while it is also increasingly measurable and easy to impart of employees.
Recent bodies of research have also backed this assertion, with a July report commissioned by the CIPD suggesting that culture is increasingly important to effective leadership and governance in business. The report also highlights the time-consuming an challenging nature of creating a corporate culture, which is why this consideration is increasingly overlooked by entrepreneurs.
Make no mistake; however, creating a business culture can elevate your company in the eyes of customers and employees, helping to influence decisions and behaviour in the process. This can make the difference in a competitive market, although it will require a gradual and structured investment that must be sustained over time.
Now, you may well argue that insurance can hardly be described as a hidden cost. While every business-owner is aware of the need to insure their products or services, however, you may not understand the full extent of the coverage that you need to be compliant.
This is a huge consideration, and one that can help you to remain compliant with constantly changing and evolving markets. It can also save you huge amounts of money in the long-term, while enhancing your reputation in the eyes of both customers and employees alike.
We recommend reviewing your insurance coverage and compliance requirements regularly, but at the very least you will need to ensure that you have both employer liability and public liability insurance. It is also sensible to invest in coverage against injury and property damage, as these can also incur huge costs if they are not covered by your policy.
You will also need to look into the complexities of things such as haulage coverage if you deliver products direct to the consumer, along with any other bespoke considerations that are associated with your business.