Top 10 Expensive Services Small Businesses Pay For But Don’t Need

Top 10 Business Expenses Small Businesses Pay For But Don't Need
10 Business Expenses Small Businesses Pay For But Don’t Need

Poorly managed small business expenses can either make or mar the success of a new startup. With a cloud of extremely cash crunch services affecting the expenditure of small businesses, maintaining a sustainable cashflow for many startups, especially online businesses, is getting increasingly (and temptingly) difficult.

Many small businesses pay for services they either don’t need or that they could have paid far lesser for. By monitoring and keeping unnecessary business expenses in check, your startup can maximize its profit potential.

If you’re uncertain of how cash is leaving your startup or are looking for ways to still reduce your business expenses on compulsory payments, here are 10 expensive services small businesses pay for, but don’t need:

See Also: 7 Sure Ways To Cut Your Expenses And Increase Your Profit


1). Buying Dispatch Vehicles Instead Of Using A Courier:

Most small businesses handle home deliveries to a couple of their customers. From banks to insurance companies, to e-commerce businesses, and a lot more, they usually set out on dispatch bikes or vehicles to deliver their items or parcels.

The problem of self-handling the logistics of a business are the expenses emanating from acquiring the dispatch vehicles, registering them, fuelling them, and running periodic maintenance and repairs. These activities could tank the profits been generated in the business. Fuel cards could be a good investment if your business consumes a large quantity of fuel every month.

By outsourcing your logistics to courier companies, the cost of delivery drops drastically, saving you thousands monthly, in negative business expenses you could have incurred.


2). Renting Large Office Spaces Instead Of Shared Or Moderate Spaces:

Fancy large offices can be cool and amazing to work in, but are usually very expensive to lease. The cozy potential of the office spaces drives a lot of small business owners into making the mistake of renting large offices for their businesses, when they have just a few employees. Some other excuses could be to look professional when a client turns up.

Starting up with an office larger than your workforce is highly unadvisable. To save cost every step of the way, only operate from modest sized good looking offices. If you have an issue with the office size and look, you could join a co-working space like the CC-Hub or Capital Square in Nigeria. By joining them, you can be certain your clients would visit a cozy and professional environment which you would have paid an affordable membership fee for.

See Also: 10 Beliefs And Financial Decisions That Keep You Broke


3). Hiring All Full-Time Employees Instead Of Splitting With Freelancers:

Hiring full-time employees you can always have your eyes on is crucial for every business, but sometimes, mixing your workforce both with full-time employees and freelancers works better for a business.

A role that gets rare service demands should only be handled by a freelancer, in other to save constant employee salary costs. Though the fee the freelancer would charge could be more than twice the amount of a monthly salary, the long term financial benefit of keeping the individual as a temporary staff of the company far exceeds the short-term financial constraint.


4). Paying For Permits & Licences That Are Not Required For Their Businesses:

Delivery companies usually have to pay for multiple licences and permits to enable their courier fleet easy access to many areas of a country. The same applies to many other businesses. Where some businesses lose money is when they try to pay for every possible permit, including those that doesn’t concern their business, so they can feel safe whenever they’re operating their daily activities.

By always piling up your business expenses together with unnecessary permits and licences, you’re not just showing you have poor money management skills, but that your profit margins within a specific period would always be slightly lower.

See Also: 5 Important Things To Know Before Starting A Business In Nigeria


5). Buying Brand New Equipments Instead Of Fairly Used Or Leasing:

Brand new equipments are usually the best tools to purchase in any situation. Due to their relatively new state, their long-term use and efficiency can usually never be questioned. But when you’re starting a new business, purchasing fairly used or leasing equipments for use is usually the best route to go.

The reason for this approach is that spending your capital on highly expensive equipments can leave you with little to no cash left to run your business. But leasing on the other hand, ensures every other part of your business can move forward while you only rent the equipment when you need it.

This way, you cut-down your business expenses a lot.


6). Excessive Taxes:

Most businesses ignorantly forget to list all their ridiculously unnoticed expenses as part of their business expenses for the tax year. They leave them out feeling they don’t matter much, but never realise that when those little sums are added up over a period of one year, they amount to something.

For those using their homes as offices, they forget the fact that they as individuals are separate from their businesses, and should appropriately charge a rent to the business yearly, which could be great legal tax deductions.

With so many ignored business expenses based on prior ownerships and more, many small businesses lose a lot of money to the tax collectors.

See Also: How To Make Money In A Recession


7). Using Credit Cards To Pay For Services:

Credit card fees in the western world can run as high as 3% in vendor fees per transaction. This leaves the business with a higher sum to repay, every time the card gets used.

Instead of using just any credit card issued by the first company you come across, do a careful research on all the available vendors to determine what may be the best option for you. This way, you’ll save more money for your business.


8). Using A VPS Instead Of Starting From A Shared Hosting:

Many new e-commerce companies choose to host their online stores on Virtual Private Servers (VPS’s) instead of a shared hosting. They always speculate that they’d have a lot of traffic upon launch, and may be unprepared for what could happen. What they fail to realise is even at 10,000 unique visitors a day on their website, a shared hosting would still work.

This mindset drives them to spend $299 a month, when they could have spent $6.99 a month to achieve the same thing. As their startups run, they accumulate a lot of business expenses and end up losing a lot of their money.

If you’re launching an internet startup that serves whatever purpose, starting off first, from a shared hosting than a VPS, would save you hundreds of dollars monthly.

See Also: 6 Recession Proof Business Ideas & Opportunities In Nigeria


9). Buying A Brand New Car Instead Of Fairly Used:

Cars that should be purchased by a small business in its early years are best foreign used cars. They save the small business owner money, and still deliver great value for what they are worth.

Buying a brand new car on the other hand will deplete your resources quickly and leave you financially stranded in a short time.

If you need a vehicle or two for your startup, one way to manage your business expenses is to only acquire sound foreign used cars than their brand new versions.

There is always an alternative regarding your options for business vehicles, you could always lease a vehicle instead of purchasing one, lease payments can be even cheaper than a normal monthly car payment, not only that but you may be able to save additional money on the upkeep of the vehicle as this can also be covered by the leasing company, what is and isn’t included in your lease agreement varies from leasing company to leasing company so make sure to ask for a complete breakdown of what’s included when making your enquiry.


10). Hiring A Well-Seasoned Bookkeeper:

Highly experienced bookkeepers are always very expensive to retain. But irrespective of this, some small business owners still push through their cash crunched state to pay exorbitant fees to keep these bookkeepers. What most new businesses have failed to realise is that hiring a basic bookkeeper that records your transactions locally on a book and online through a service like Quickbooks, could both be more effective and definitely far cheaper.

To cut your bookkeeping costs, either do it yourself on a record book and also online, or hire a basic bookkeeper to handle both ends for you.

This will save you considerable business expenses in hiring a highly experienced bookkeeper.

See Also: 10 Ways To Build A Successful New Business


What are your thoughts on these 10 business expenses small businesses pay for but don’t need? Let me know by leaving a comment below.


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Stan Edom
Stan Edom
I'm an entrepreneur with an expertise in supply chain management, small business development, e-commerce, internet startups, and agriculture. In my spare time, I'm always trying to solve problems people face in their everyday lives with tech.

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  1. Your point in no. 2 is what most people indulge themselves into.
    I know of a man with his daughter who started a computer business centre where they also do computer training as well.
    But to my greatest surprise, the centre did not last for 6 months and they evacuated the office.
    And i began to ask close-by persons and i was made to know that the rent of that office was too expensive for them to handle and so they had to pack out.

    You’ve definitely said it all, new business starters ought to get an office or store which is less expensive so they wont have to waste all their earnings on the payment of store rent.

    I know most people will say ‘but if i dont have a nice well furnished office, that means i dont look professional’
    But, is it your office that makes you look professional?
    No! What you do and the quality of service you are able to render to people will make you look professional.
    If you know what you are doing, your work will speak for you and not the kind of office you rent.
    Thanks stan

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