Five hidden costs you shouldn’t ignore when starting your business

Authored by Sebastian St. John Clarke.
3 min read
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The old adage that cash is king is as relevant now for small businesses as it ever was. Business can be booming but if money is going out quicker than it’s coming in, then few businesses can expect to survive for long. We take look at the five of the hidden costs that you will need to factor in to your business start-up cash flow calculations.

The financial pressures of running a business can be even more acute when you’re starting out: in the early days your income stream may only be a trickle but the cash still keeps pouring out.

So, what expenses can you expect to incur when setting up? Office costs, equipment, employees, travel – these are the obvious drains on your stretched purse. But what about those less obvious costs that may get missed from your initial budget?

We take look at the five of the hidden costs that you will need to factor into your business start-up cash flow calculations:

Technology costs

Every business needs a web presence and it will cost money not only to set up a professional-looking site but also to have it hosted.

Backing up your data is critical and might well involve paying for an online back-up service or use of the cloud for example.


Do you need to protect that great idea? If you don’t want someone to copy what you’ve done, consider taking out a patent.

This process can cost up to £280 and there are renewal fees payable if you want to keep the patent current. See the Intellectual Property Office (external link) for more detail.

Business Insurance costs

Policies such as public liability, which covers your business from the risk of being sued by a member of the public, and professional indemnity, which helps if a client makes a claim against you for negligence, may help to protect your venture.

You might also need to consider insuring your business equipment and gadgets, or your own inability to work due to illness or injury.

There are some insurance covers which may be mandatory for your set-up, such as employer’s liability if you have employees.

Professional fees

As a small business you get used to multi-tasking and doing most things yourself. But there might be some tasks you just can’t manage. Doing your own accounts might be straightforward enough when you’re working as sole trader but form a limited company and you will need to negotiate your annual filings and payroll.

An accountant could (literally) pay dividends here. There are also fees that you might incur such as subscriptions to professional bodies.

Don’t forget the opportunity cost of your time

And finally, there’s you. You’re a hidden cost. OK, you might not be draining cash from your business in the way that paying for a service might, but don’t forget that the hours you spend doing things that don’t earn you income represent lost revenue.

When you’re the boss, it’s easy to insist in getting involved in every aspect of your business – this is perfectly understandable, given it’s your baby. But for your business to really work efficiently, it’s best to focus on the tasks that will help grow the business – time spent doing other people’s jobs is wasting the cost of your time and theirs.

When you’re working full-time on your vision and passion – whether alone or one of a group of partners – dealing with the hidden costs may not be your first priority. But taking the time to factor them in to your plans can ensure you’re not stung with a hefty bill at a time you can least afford it.

At Hiscox, we want to help your small business thrive. Our blog has many articles you may find relevant and useful as your business grows. But these articles aren’t professional advice. So, to find out more on a subject we cover here, please seek professional assistance.

Sebastian St. John Clarke

Sebastian St. John-Clarke is a freelance writer and B2B communications consultant. He has dedicated a lot of his career to the insurance sector, working with Hiscox as our Head of Group Communications for a time. Sebastian has since set up his own small communications business, Paper Plane Communications.