The rising costs of rent, utilities, fuel and transport, supply chain disruptions, wages, and inflation are placing greater pressure on New Zealand small business owners.
Small and Medium Enterprises (SMEs) are the core of the New Zealand economy. The Ministry of Business, Innovation and Employment has highlighted that there are approximately 546,000 small and 10,000 medium sized businesses in New Zealand representing 97% of all firms. They account for 29.3% of employment and contribute over a quarter of New Zealand’s gross domestic product (GDP).
If you’re a business owner or are considering starting your own enterprise, you know there are a number of day-to-day expenses you have to think about. What catches many business owners off-guard are the unexpected costs.
Here are 8 ongoing business costs you need to consider.
Lost in time
According to a study by Southern Cross Health Insurance BusinessNZ, sickness absence costs New Zealand businesses an estimated $1.85 billion per year. The study found the average employee takes 4.7 sick days per year. This equates to 10 million sick days taken annually by the workforce nationwide.
Another high cost to business is work-related stress and fatigue. This can be caused by:
An unreasonable workload.
Lack of health and safety precautions against hazards.
Workplace bullying.
Workplace restructuring.
A toxic work environment.
Workplace stress and fatigue can also lead to higher instances of:
Absenteeism – The number of days taken off due to a mental health condition where the employer is paying for not having a person present to undertake the work.
Presenteeism – The number of days where a person is less productive in their role due to their mental health condition.
Creating and encouraging a mentally healthy work environment delivers many business benefits. This is in the form of increased employee engagement and productivity, as well as reduced employee turnover. You also quickly gain a reputation as an employer of choice helping to attract top-tier people.
The cost of compliance
Running a business in New Zealand requires an understanding of compliance requirements for your industry. Whether it’s a construction licence, liquor licence, medical industry accreditation or tobacco taxes, the cost of compliance can financially impact your business.
The challenge for New Zealand SMEs is these requirements can be complex and confusing, which means you could unintentionally be operating a non-compliant business. Employsure industry experts can provide advice on compliance for your business and industry.
Fix or replace?
Depending on your business, essential assets such as office equipment or mechanical machinery is another cost you are likely to be aware of and factored into your operating expenses. While ongoing maintenance and servicing to address general wear and tear as well as damage can be budgeted for, an unexpected need of urgent repairs can cause a cost blowout. You may sometimes need to assess if the cost of repair is greater than replacement.
Why are there 5000 of those?
Inventory holding costs such as stock storage, insurance, and transport can severely cut into your profits if not taken into consideration. For hospitality businesses with perishable goods this cost can be even more critical and impactful.
Paying to pay
In an economy that’s further moving to cashless transactions there are a number of different payment processing platforms available. Whether it’s a simple tap-and-go card transaction or a buy-now-pay-later option, there are often processing fees that need to be considered and factored into your pricing. It’s also important to know that the surcharge must not be more than what it costs your business to use that payment type. Overcharging on transaction fees could lead to a fine.
Welcome, new employee 107
Employee turnover is costly, particularly for small businesses. When someone chooses to leave your business, you’re not just losing an employee, you’re losing their experience and knowledge. Recruitment and training require a large investment of time – selecting and interviewing prospective candidates, and money – advertising for a new employee then onboarding them correctly.
Depending on your type of business and industry, it can also take several months for a new employee to become familiar with your business operations, procedures, and functions before they become productive and profitable.
Access denied
Phishing scams, data breaches, and cyberattacks are a constant threat, especially to small New Zealand businesses as they don’t often have the security protocols of large organisations. This makes SMEs a preferred target of cyber criminals.
The need to protect business critical and personal identifiable information (PII) has led to data security and cybersecurity becoming more important for small businesses. Investing in the right IT security is essential for every business. The cost of a cyber attack could be crippling for a small business.
Consultation frees
Professional industry advice is invaluable for small businesses with limited internal resources. If you engage a business consultant or advisor, fees for these services can rapidly accumulate into the thousands. With access to a free 24/7 advice line, Employsure clients can receive HR, workplace relations, or HSW advice from a team of industry experts.
Making dreams a reality
Many people dream of running their own business. While it takes hard work and sacrifice, it is also exciting and rewarding and – if done successfully – can be highly profitable.
Being aware of the many different costs your business may experience and knowing who to turn to for the right advice and insights is the key to long-term success. If you need advice with Employee Relations or HSW support 24/7, the Employsure team is always here for you.
