Nothing is as exciting as growing your business towards its full potential and meeting the business goal. However, this comes at a cost since you must use money to run the operations. 

So while managing the business, you must budget well to avoid misappropriation of funds. Apart from that, you must categorise the expenses to be in full control of your spending. But which expenses must you be ready to spend on while scaling the business? 

This guide explains the 4 business expense categories and how to manage them to keep the venture on the right track. 

 

Operating Expenses 

 

Operating expenses are the monies small business owners use to keep the venture afloat. But such expenses are not for service or product production. A scaling business might have more operating expenses that it must cover daily, so it’s best to manage your finances well. This is because you could be hiring office space and vehicles. 

Some of the operating expenses you should expect to cover include: 

 

Rent 

Rent is one of the main operation expenses your business must pay. Remember, a physical shop or office is much more important for small business owners as it helps convince customers of your existence. The amount of rent will depend on the shop’s location, size, and much more. 

 

Payroll 

Another operation expense you must be ready to foot is the payroll. Remember, most small business owners have employees who expect payment on a monthly or daily basis. Apart from the salary the workers also must enjoy some benefits for working with your company. 

 

For example, you may pay for their healthcare costs and certain taxes, which makes your company a good employer. Paying taxes can prevent penalties and reduce your tax bill. 

 

Fuel and Mileage Costs 

If your company has vehicles, you should also pay for fuel costs. But the purpose is to reimburse fuel costs to employees if they use their cars to work. The reimbursement costs will depend on the state. 

 

Utilities 

As a scaling business, your utility bills might also increase. So plan well and have enough money for WiFi, water, garbage, and electricity. Sometimes, you might have to pay recycling and repair costs, depending on your location and lease agreement. 

 

Equipment 

Even though each business requires unique equipment, it’s a cost you must cater to allow smooth operations. Be prepared to buy and maintain computers, printers, scanners, chairs, and television screens. This amount might also include security systems and signage. The total amount for this depends on the type of equipment you opt for. 

 

Office Supplies 

Your office will also need paper, pens, clips, files, ink, staples, binders, and markers. These are necessities the office cannot do without. So on a daily routine, plan to buy such items. 

 

Human Resource Expenses 

The human resource department also has operations that require enough money to run. Some of the expenses you should expect to pay for in this department are: 

 

Training and Learning 

With the current technological advancements, it’s good for the HR department to facilitate training programs that keep the staff updated. So under this expense category, small business owners are expected to foot for the learning programs to smooth the scaling journey. 

You can invest in training programs like 360Learning and enable your employees to upgrade their skills and work with fewer challenges. The training programs can also make the onboarding process easier. 

 

Employee Perks 

The HR is responsible for the welfare of employees, so travel and entertainment expenses fall under their care. The entertainment budget ensures the team members conduct team-building activities that encourage collaboration. But the travel allowances are for networking events, sales visits. 

Consultants and Professional Service Fees 

As your business expands, seeking guidance from experts becomes crucial. Small business owners can streamline their focus by outsourcing non-core responsibilities to specialised agencies or professional firms, optimising their time and resources for vital tasks. Just like Grof, our mission is to eliminate you from accounting and compliance concerns, simplifying business finances effortlessly and effectively. 

 

Marketing and Advertising Expenses 

Another expense category that requires good budgeting is marketing and advertising. Remember, the business needs to expand its market reach and attract new customers. Additionally, it’s important to improve brand awareness and revenue, which the marketing and advertising department is responsible for. 

To allow this department to operate without challenges, provide money for the following: 

• Promotions 
• Tv, radio, social media, and print ads 
• Offers and discounts. 
• Billboards, leaflets, and stickers. 
• Public relations and content creation costs. 

 

Technology Expenses 

Technology is an integral part of any business as it helps reduce workload by automating services. Your team members can also use different technology to communicate and collaborate. Plus, technology is a time and money saver. But you must be ready to spend operating expenses on technology to enjoy such benefits. 

The common technology expenses small business owners pay for are: 

 

Server and Website Maintenance Costs 

You will need to pay for website maintenance for it to remain updated and operate effectively. This will depend on the website’s size and the service provider. Maintaining a website requires SSL certification, email hosting, domain name, tech support, and updates. 

 

Software Subscriptions 

Don’t forget to set aside some budget for software subscriptions! These subscriptions are like helpful allies, lightening your workload. They usually come with monthly or yearly fees. Remember, keeping your software safe and updated requires occasional maintenance, the costs of which can vary based on the software you use. 

We get that wisely allocating funds is a big deal for startups. That is why we created a free business account for all Singapore-registered companies. It is here to make managing your finances a breeze, all in one convenient place. 

 

How to Manage Expenses Effectively with Spend Management Solution 

Given that keeping up with the operating expenses can be overwhelming, using a spend management solution is highly recommended. This will help you know how you’re spending your money and ways to regulate the costs to avoid funds mismanagement. It will also streamline your cash flow and reduce the risks that managing a business invites. 

Check out the benefits of using an expense management solution:  

 

Track and Verify Your Expenses 

Embrace the benefits of an automated expense tracking system that records every expense in real time, ensuring accuracy and preventing oversights. This safeguards against potential fraud and maintains a close watch on your expenses. The added bonus? It frees up your time and resources, enabling you to concentrate on business growth. Moreover, it boosts efficiency and precision, facilitating quicker and more insightful expense analysis for informed decision-making. 

 

Automate Reimbursement Processes 

As your business expands, your team size will naturally increase. Streamline the cumbersome manual email reimbursement procedures by utilising our business account. Enable your employees to effortlessly upload their receipts by snapping photos within the app. Our advanced OCR technology handles the data entry automatically. Just choose the expense category, upload it to the dashboard, and await the approver’s confirmation. It’s just that simple! 

 

Better Report and Analysis 

Gain insights into your spending patterns, effortlessly track expenses within each category, and collaborate with your fellow accountants to curtail unnecessary costs. This empowers you to make well-informed choices for the company’s financial planning. Additionally, it offers a gauge to ensure you’re on the right path, avoiding overspending and maintaining a balanced budget. 

 

Bottom Line 

 

Managing business expenses can be overwhelming as it entails a lot of calculations and data analysis. However, this gets easier after categorising the costs according to the departments in your organisation. For example, you can have operating expenses in a different section from the technology costs. 

 

Categorising the business expenses can also help you prevent legal penalties, as some are considered a tax. But this gets even better after understanding the business growth tips which spend management solution facilitates. Sign up for a free account with us today!