{"id":15492,"date":"2016-10-20T12:03:20","date_gmt":"2016-10-20T12:03:20","guid":{"rendered":"https:\/\/www.nationalfunding.com\/lending-finance\/managing-operational-expenses-more-effectively\/"},"modified":"2023-04-25T16:00:25","modified_gmt":"2023-04-25T23:00:25","slug":"managing-operational-expenses-more-effectively","status":"publish","type":"post","link":"https:\/\/www.nationalfunding.com\/blog\/managing-operational-expenses-more-effectively\/","title":{"rendered":"Managing Operational Expenses More Effectively"},"content":{"rendered":"

In broad strokes, an operational expense is any cost that is necessary to running a business. Some of the more obvious expenses that fall under this umbrella include the cost of renting retail space, utility bills, wholesale expenses and labor.<\/p>\n

However, as any small business owner is aware, not all of operational expenses are quite so on the nose. Over time, less obvious sources of overhead start to add up, and those who aren’t careful risk being blindsided by debt and, ultimately, bad business credit.<\/p>\n

In this post, we’ll look at some of the operational expenses that have a tendency to sneak up small businesses and create obstacles for management.<\/p>\n

Compensatory costs<\/h2>\n

Compensation doesn’t just amount to paychecks.<\/p>\n

According to Zane Benefits, smaller businesses pay for 85 percent <\/a>of employees’ health care premiums, which based on the 2015 average cost of $6,163, equates to about\u00a0$5,264 each year, per full-time employee. For family plans, employers covered about 65 percent of the cost, or\u00a0$10,720. Depending on whether your small business has only a handful of full-time employees, or closer to the 25-person mark, as well as how many of them have families, you may be responsible for tens of thousands to hundreds of thousands of dollars just for employee benefits. While the ACA does not directly penalize businesses with 25 or fewer employees for not offering health benefits, good coverage is still important. In fact, quality health coverage can be the determining factor for why a certain employee will sign on with you instead of the competition.<\/p>\n

This doesn’t factor in other costs and basic\u00a0accommodations\u00a0for workers such as holiday parties, employee discounts, stocking the break room with coffee, etc. These may seen nominal, but such costs can add up over time. If employers aren’t careful as they account for operational expenses, they can easily run up a deficit. If business owners are unable to pay off their debts in a timely manner, their business credit will suffer, and that will make it harder to dig out of debt.<\/p>\n

It’s therefore important that small businesses do the math ahead of time\u00a0and\u00a0capitalize fully on any money-saving opportunities available. For instance, under\u00a0ACA, small business that have fewer than 25 full-time employees<\/a>, an average worker salary of $50,000 or less and that cover at least 50 percent of their employees’ insurance premiums are eligible for tax breaks and tax credits. Taking advantage of these provisions can help small businesses avoid becoming mired in operational expenses.<\/p>\n

Asset insurance<\/h2>\n

It’s no secret that small businesses need to insure certain assets. According to\u00a0Forbes, there are a variety of different types of small business insurance<\/a>\u00a0including, but not limited to, the following:<\/p>\n