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It’s no secret that small businesses play an important role in our economy and in helping to build thriving communities.  But what might not be known is that small businesses are constantly under attack and it’s not just from the competition.

 

Instead, the shops and cafés that you visit every day are being squeezed by costs such as insurance, property taxes, and even credit card fees.  These are the silent killers of the entrepreneurial spirit and in this article, we will take a deep look at five of the worst.

 

  • Insurance Costs

 

While the high cost of health insurance has dominated the news for most of the year, it is really part of a broader trend which has been squeezing small business owners for the last 20-years – runaway insurance costs.

 

From property and casualty to workman’s compensation, the cost of insurance has been rising fast than inflation for more than a generation.  What does this mean for small businesses?  Given that some insurance policies are mandated, it means that they are essentially forking over hard-earned money to protect against risks that might not happen.

 

The problem is that you never know when you will need to use your insurance policies, so you keep paying.  Imagine you have a small manufacturing company in Minnesota and that none of your employees has been injured at work for years.

 

While this is a great streak and it shows the energy you have put into making sure your business is a safe workplace, there is always the chance that your ‘days without an accident’ could be reset to zero.

 

As such, you continue to pay for coverage that you might never use.  Over time this can add up to hundreds of thousands of dollars – all of which could have been used to reinvest in your business.

 

  • Property Taxes

 

‘You can’t fight city hall’ at least that is how the saying goes.  But the precarious state of local government finances has forced them to continually increase property taxes.  Despite all the talk about tax reform in Washington, nothing is being done to address this issue.

 

Instead, state and local governments teeter on the brink of bankruptcy while the put the squeeze on the very small businesses which keep their communities from turning into wastelands.

 

The sad fact is that there isn’t much that most small business people can do about it.  If they refuse to pay their property taxes the government will seize their businesses and by the very fact that small business is ‘small’ means that no one is lobbying for their cause at statehouses around the county.

In addition, moving is not always an option. Sure, if you are a manufacturer, you could consider moving across stateliness.  But what if you are a café or a shop?  In that case, you are very much tied to where your business is located.

 

  • Rent

 

If you are fortunate enough to own the property where your business is located, then you don’t have this worry.  But for most of small businesses out there, the fear of continuous rent increases is enough to keep them up at night.

 

What can be done?  Well, you can raise prices in line with rent increases, but you can only do this so often.  Instead, what you want to do is try to negotiate a long-term rental agreement on your unit – just make sure you have an option to sublet if things don’t work out.  Doing so will give you some certainty when it comes to rental costs.

 

In addition, take a long look at the space you are using and ask your safe if you really need it.  If your business has more than 10 percent unused space, then you are essentially bleeding cash without knowing it.

 

If this happens to you, then talk to your landlord and see if they can either divide the space or if you can sublet it.  This way you get rid of silent, but deadly, loss leader.

 

  • Credit Card Fees

 

Have you seen the interest rates charged by credit card companies?  Some loan sharks don’t charge as much.  Add to this the fees, such as annual membership fees, etc. and the costs of having a credit card can quickly outweigh the benefits.

 

But that is just one side of the equation as many small businesses also accept credit cards and this means that the credit card companies have another chance to get blood from a stone.  This time it is in the form of merchant account fees and even the time it takes to get your money.

 

As such, you want to sit with your accountant and take a good hard look at what you really paying for credit cards.  Maybe you can work with another company to handle your merchant transactions or you need to do what gas stations do and charge a premium for credit card purchases.  In the end, the decision will depend on the specifics of your business.

 

  • Utilities

 

This is another silent killer as you need the juice running through the power lines to keep your business humming.  While most people chalk up their utility bills as a cost of doing business, they are missing an opportunity to save money.
Part of this includes setting up an equipment fire up schedule as most pieces of equipment use the most power when they are being turned on.  Another option is to invest in high-efficiency equipment – and lighting.  Finally, you can consider installing a behind-the-meter energy storage device.  This would allow you to purchase power during off-peak times which you can use during peak times.

 

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