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6 Unforeseen Expenses Online Businesses Face | SMB Compass

Ezra Cabrera | April 26, 2019


    Many entrepreneurs assume that starting an online business is a piece of cake. After all, you don’t have to pay for physical space and the overhead costs are minimal. By far the biggest appeal of operating an online business is due to the low amount of working capital needed to cover start-up business expenses. In some cases, you might not need to apply for Dallas business loans – or do you?

    Related: 5 Key Benefits of Running an Online Retail Business

    Most aspiring entrepreneurs underestimate the costs of launching an online business. But just like any other venture, online stores have their fair share of hidden business expenses. If you don’t prepare and address these expenses immediately, it can negatively impact your business. With that said, here are four of the most common ‘unforeseen’ business expenses.

    1. Permits and Licenses

    Contrary to popular belief, online businesses have to apply for permits and licenses as well. You may be asked to register for sales tax or you may be required to apply for a professional/occupation license before you can fully launch your online business. You may also have to obtain a general business license or a weights and measures license.

    Keep in mind that the permits you need will vary depending on your state and district. If you do need one, the costs of obtaining permits and licenses can range from hundreds to even thousands of dollars. Be sure to ask the department that’ responsible for permits and licenses. Then follow the advice they give to make the process easier.

    2. Equipment and Maintenance

    Equipment and machinery may be one of the most expensive expenses for online businesses. The most common equipment needed by online stores is laptops, routers, and of course, your internet connection among others to keep your business going. Aside from purchasing or leasing equipment, you may also need to pay for repairs and maintenance along the way.

    All in all, the costs for equipment and maintenance can go up to thousands of dollars. If you’re still a start-up online business, this could be difficult to finance. Fortunately, you can apply for business loans that will give you the funds you need to jumpstart your business.

    Related: How Equipment Financing Helps Small Business Owners

    3. Insurance

    Since online businesses don’t have an office or physical space, most business owners think they won’t need insurance. However, you may still need different types of insurance to protect your business, such as product liability insurance, general liability insurance, and even a business interruption insurance. Applying for this kind of insurance coverage can cost you hundreds and even thousands of dollars.

    4. Marketing and Advertising

    If you don’t invest in marketing and advertising, it’s harder for you to grow and expand. While there are advertising strategies that don’t need monetary investment (content marketing, social media, Google My Business, etc.), a majority of the time, you will still need to invest a few hundred or thousands of dollars to support your business. To boost the credibility of your online store, it’s also best to have a professional design your branding.

    5. Web Design and Hosting

    Since you’ll be doing your business over the internet, the web will become your store. Like a physical store, you’d also need to make your space attractive and professional. In fact, your web design directly influences the decision of your visitors to buy or avail of your services. With that said, you’d have to be prepared to spend a bit on web design.

    Other than web design, you also have to pay for web hosting. This stores the files on your website at a remote computer and makes sure that your website stays up live 24/7. The fee for web hosting is usually charged either annually or monthly, depending on the company.

    6. Shipping Fees

    The truth about shipping fees is that it can be unpredictable. If you’re still starting on your online business, there’s a big chance that you’d have little knowledge about shipping and the costs associated with it. The good thing is, you’ll eventually get used to it through time.

    Large companies with established success rate can typically cut a deal with the shipping companies. But since you’ll still be starting, you can expect shipping fees to vary depending on the type or weight of the products. Some days you’ll have to pay for more, but on some, you may be able to pay less. The bottom line is, you’ll have to prepare for the costs to shift from time to time.

    Dallas Business Loans – Small Business Loans for You

    Whether you are properly prepared and positioned, the odds are high your business will face unforeseen business expenses. For this reason, it’s best to be proactive. Dallas business loans will not only ensure that you’ll be financially ready to deal with unexpected or emergency business expenses. With the cash on hand, you can also be ready to grab whatever opportunity, should it present itself. Be sure to shop around for reputable lenders. Compare the costs and terms to make sure that you get the best deal for your business.

    About the Author

    Ezra Neiel Cabrera has a bachelor’s degree in Business Administration with a major in Entrepreneurial Marketing. Over the last 3 years, she has been writing business-centric articles to help small business owners grow and expand. Ezra mainly writes for SMB Compass, but you can find some of her work in All Business, Small Biz Daily, LaunchHouse, Marketing2Business, and Clutch, among others. When she’s not writing, you’ll find her in bed eating cookies and binge-watching Netflix.