The last year has taught us to expect the unexpected. No one could have foreseen the events of 2020 and, as we continue to rebuild and the country begins to reopen, many businesses that are emerging from lockdown look very different to when this all began 12 months ago.
As a business owner, you may have had to adapt to the way you work. You might have quickly implemented tech to make sure you could stay in touch with your team while they carried out their regular duties at home. You might run a retail business and found yourself moving your operations online, building an e-commerce site for the first time.
None of these changes could have been predicted, yet you made them, and your business is still gong strong. Just as you couldn’t have expected recent events, it’s possible to not expect expenses that can appear out of the blue. While these extra payments aren’t scheduled, it’s possible to plan for these. Here’s a look at how it can be done.
What is classed as an unexpected expense?
Before we can look at how to prepare for these unexpected expenses, it’s worth looking at what they are. In a nutshell, these are unpredictable payments that you need to make. They’re not irregular expenses that crop up every few months, such a renewal for your business insurance.
Instead, these are things that crop up without warning and often require immediate attention. This, in turn, can impact on your original business budget.
Common unexpected expenses
Due to the nature of these expenses, they can cover a number of things. However, there are some common types that happen in business.
For instance, you may suddenly see a surge in demand and need to hire more employees than originally budgeted for. Or it may be that you need to invest in more computers or technology related to the sector you work in in order for your employees to do their job effectively.
It may be that repairs need to be carried out on the premises that you’re renting. This can be a common issue for those renting office space. Similarly, one of the cars used for business may need repairs.
Another common issue that you might encounter is that you suddenly lose a supplier or client due to issues at their end. If these are significant or lucrative suppliers in your business, it can mean you need to bridge the money gap and find ways to pay for staff, as well as cover running costs.
How to prepare
There are ways to plan for these instances where you suddenly need to reassess your finances. First, have a backup fund for emergencies. Setting aside money for situations such as this can put you and your business in a good financial position.
To create this emergency fund, you’ll need to budget for it. Plan for the everyday expenses of your business, as well as factoring in periodic payments. Once you’ve planned these in, you can look at setting aside business savings to help in the event of an unexpected expense.
Also, it’s worth being open to taking out a secured business loan. This can help you to cover those unforeseen expenses and, as long as you can keep up with repayments, allow you to get back on track as soon as possible.
Another way to prepare is to shop around. Find deals on suppliers and running costs, as well as business insurance. Keeping costs low for your everyday expenses should free up cash that can go towards anything that comes in that wasn’t planned.
While these events aren’t ideal, it is possible to overcome them and keep your business finances on an even keel.