Unanticipated major expenses are one of a business owners’ worst nightmares, even when the quantifiable costs might not seem outrageously high. An extra $1,000 may not seem like a lot to your bottom line, but when those funds are vital to running your small business, the results can be tough to shake off.

There is some good news: You can learn from those who have come before you, and avoid the same bumps in the road. Use this guide as a map to scout out common small business budget oversights. That way, you can take steps to avoid your own cash flow issues, or plan your strategy for recovering.

Vendor Costs

Conserving your resources is essential to any winning strategy, and time and money are the two that demand the most attention. Often, business owners closely monitor cash expenses, but their time (or their employees’ time) isn’t held as precious. Though it may be tempting to pinch pennies by keeping all work in-house, there will someday be a task too complex or time consuming for your team to handle. A recent study showed that most small to medium sized businesses have an average of 13 team members.1 That number might not include experts in web development, graphic design, law, or marketing. With this in mind, your budget will need to make room for work outside the expertise of your paid staff.

Well, maybe. One route to avoiding sudden vendor costs is to seek out online tools to do it yourself. For instance, you may want to keep an attorney on retainer, but they can charge anywhere from $150 per hour for junior partners to $1000 per hour for senior partners.2 Simple tasks like applying for licenses and permits might be easy to accomplish using LegalZoom or Rocket Lawyer. Reducing the number of hours your necessary vendors work will ultimately ensure you keeping a tight lid on your third party budget, and only pay out for expert support when it’s truly necessary.

Sitting down with an accredited and capable financial advisor can help to alleviate some of the stresses that come with borrowing against your company.

If you make the decision to outsource tasks, be sure to effectively vet your vendors. There are plenty of resources to utilize when digging into the background of your third party partners, but a great place to start is the Better Business Bureau. The BBB helps to track experiences and ratings for businesses of all industries.3 Additionally, interviewing several vendors will help in giving you a sense of your local market pricing and available services.

Facility Maintenance Costs

In the event that an air conditioner breaks down or the roof caves in, it will be helpful to have a rainy day fund. Even small expenses like having the fire extinguisher checked or changing furnace filters can add up.4 Small businesses can often find savings in their facility maintenance to create the very nest egg they need to cover these often-forgotten expenses. Strategic investments in reduced utility costs can save small businesses 10 to 30% annually.5

You can achieve these results in a variety of ways, such as installing low-energy bulbs, tracking energy usage trends to find sources of waste, or having routine equipment checks performed on HVAC appliances. It may also be helpful to take a deep dive into your lease, as your landlord may be required to cover the costs of yearly upkeep or sudden repairs.


Interest Rates

Small business loans can be easy to get under the right conditions, but if the borrower doesn’t understand those terms, their budget could be at risk for decades to come. Getting caught off guard by changes in your loan payment often comes from a fundamental misunderstanding of the loan’s fine print.

SBA loans accrue either fixed or variable interest. A fixed rate is higher to start with but doesn’t change, while a variable rate might be low today but high tomorrow, depending on the market.

When first obtaining or refinancing a loan, understanding these terms and conditions is essential, but you don’t have to go it alone. Connect with a third party financial advisor to get perspective on the different courses of action you can take to get funding for a small business. They’ll know where to shop around, and can set your expectations as to the timeline in which loan funds will become available for use, which can sometimes take months.6 Most importantly, however, a skilled advisor can help you determine the best possible payment plan for you. Is it best to pay a higher amount each month to pay off a loan before rates increase? Is this a situation in which you can scrape by simply paying off interest for some time until cash flow increases? Do you need a loan at all? All these questions are easiest understood through conversation and careful planning.


High Employee Turnover

Your ability to retain your team can be a make-or-break factor for your company’s success, but did you know it also has major implications for your budget? A study by the Society for Human Resource Management found that the average company spends an equivalent of six to nine months of the employee’s salary to find and train a new employee.7 Another study revealed that for highly trained employees, replacing an employee can cost a business up to 213% of the salary.8

Thankfully, there are plenty of ways to boost employee retention that can cost a fraction of a high turnover rate’s expense. The first step is an adequate and thorough interview and onboarding process. The Harvard Business Review found that 80% of employee turnover is due to bad hiring decisions.9 When making a hiring decision, be sure to:

  • Interview at least three people for a position
  • Interview top candidates in three different locations
  • Integrate group interviews with varying members of your team, to get their perspective
  • Utilize the SWAN method (Smart, Works Hard, Ambitious, and Nice)

New hiring decisions can be strategically targeted to bring tasks in-house and reduce payments to outside vendors.

Another vital part of reducing turnover is morale-boosting employee programming. This could be as simple as incentivized bonuses, or more personal, like weekly chats with upper management or company outings. Morale also grows along with an employee’s education and confidence in their role. Last but not least, a competitive salary that’s matched with inflation and industry standards, as well as a thorough benefits program, can be a huge turning factor in keeping employees on your team.10 Whatever steps you take to increase employee retention, they will help you avoid sudden hiring expenses.


Nearly 90% of businesses owners overpay on their taxes.11 Perhaps it has something to do with the gargantuan 70,000-page tax code, but there are several tips to cut back on costs and maximize your return:

  • Use payroll tax software, like Quickbooks, Intuit, or eSmart.
  • Know your available deductions, such as auto expenses, business lunches, section 179, and home office deductions.12
  • File your tax returns online and on time

Business taxes are another area where it’s usually better to call on an expert, especially if you’re the founder or your personal information is in some way tied to your business. The expense of professional tax preparation could rage anywhere from $500 to $800 depending on the structure of your business, but the peace of mind (and your maximized tax return) are often worth the expense.13

As you’re charting your budget for the coming year, the exciting initiatives and new projects usually grab the most attention. However, don’t forget to plan for unexpected contingencies and these common budget busters. Keeping these risks in mind will empower you to find small challenges where others would face mighty ones.