The Average Costs of Running a Small Business

The costs of running a small business is appealing to a lot of people. What’s not attractive about being your own boss and seeing your creation grow into a well-established brand? But before taking the plunge and starting up, there are various things that you must consider. 

One of the main areas that you need to consider is the costs of running a small business. Irrespective of what line of work you’re in, you can’t escape costs. And the embroidery industry is no different – as much as we’d love to tell you otherwise. 

This blog post will outline and explain the different quarterly running costs of running a small business. 

Permits and Licensese

The first cost of running a business usually starts with obtaining the correct permits and licenses that allow you to start trading. These are usually paid annually or monthly, so when factoring them into your quarterly budget, work out what the total costs would be for 3 months. 

In some cases, you may not need any permit or license to start trading. As long as you’re properly registered with HMRC and have outlined a legal structure for your business. To find out more about the different permits or licenses you may need, click here

Premises and Overheads

Unless you’re thinking of starting up your business from home, you’re going to have to consider renting out a premises to work from. For example, if you’re thinking of running a school uniform business, unless you were planning on operating solely online, you would need to rent out a brick and mortar store with storage facilities too. 

It all depends on the size of the place you want to rent out as to how much it will cost you quarterly. The rent for the facility won’t be the only cost either, you need to factor in further overheads. Utilities like water and electricity will be one of the main ones. Rates differ with different providers, so make sure that you shop around for the best rates to save your business as much money a possible. 

Equipment and Maintenance

Your equipment is one of the biggest initial investment costs. Taking the school uniform business example once again, you’ll need to invest in an embroidery machine. These don’t come cheap, but without one, you wouldn’t have a product to sell. The initial payment can be made as a one-off fee, or some companies may be flexible with finance options – so consider the payment terms and feature them in your quarterly budget.

This isn’t the only cost of your equipment either. You need to consider the upkeep of them and any maintenance work that may need carrying out. Your machines will be working hard all day, so general wear and tear might require some TLC. After considering the maintenance costs, an eventual upgrade may be required – but hopefully, that will be a lot further down the line than just a few months away from the initial purchase. 

Note that dependant on your output this might be a continuous investment – if the business is a success you’ll need more machines to produce more products. Try to plan for the future.

Raw Materials

Just like with your equipment, without your raw materials, you won’t have a product to sell. And the total cost of them is completely dependent on the deal you have secured with your supplier. 

Remember if you want to run an effective business it makes sense to plan ahead. You’ll need to keep a large stock of materials for when you are at peak sales times, but you don’t want lots of excess stock lying around when your business is not as busy.

Your supplier may allow you to pay via credit – but each business is different and so are their credit terms. Regular credit terms allow you to get the products 30-60 days in advance before you need to pay for them. So, remember in particularly busy periods to include more stock on your quarterly budget than some of the quieter months. 

Employees and Benefits

Again, it’s completely dependent on the size of your business as to how many employees you have. These are the people that make things happen in your business – without them, you wouldn’t get very far. With that in mind, you must look after them fairly and keep them motivated to make sure that they fully back your business. 

Salaries, training costs, in-business perks and annual leave are just some of the factors that you need to consider. A poor wage or unfair benefits are said to be one of the main reasons for high staff turnover. And it’s said that it costs around a fifth of a full-time employee’s salary to replace a worker if they leave

If your employees are well looked after, they’re more inclined to work harder for your business. Plus, the moral around your business will be high – this, in turn, leads to high levels of productivity which can spark amazing results.

Again plan ahead – make sure you figure out how much more you need to sell to warrant another employee. Making early predictions means you can be proactive instead of reactive. The hiring process takes time so if Christmas is your peak time start recruiting temporary staff early to avoid overworked and stressed out employees.

Marketing and Sales

You can be running the best business in the world but if you don’t market it properly or approach it with the right sales tactics, then you’re not going to get off the ground. People need to know about your business, so a marketing allowance must be allocated in your quarterly budget. What you spend all depends on what results you’re looking to achieve from your efforts. 

As technology has advanced, so have people’s buying habits. This means that you need to react to this and sell to them the way they want to be sold to. Utilising a mixture of both online and traditional marketing methods is a good way to start. Plus, a social media presence is a must in modern times. 

Remember you can do lots of marketing for no budget at all – if you utilise social media and create content that cuts through the noise your spend needn’t break the bank.


All businesses need insurance. These are some of the most important costs that’ll go out of your bank every month. At the very minimum, we suggest that you need employers liability and public liability coverage. It’s also a good idea for you to cover yourself for illnesses, negligence, property and injuries too. 

Should anything happen to your business and you don’t have insurance, you’re going to be hit pretty hard in your pocket. Plus, you don’t want to be on edge of any accident happening and you not being covered. One issue could bring your business crashing down and that’ll be it. You’ll be able to rest easier and operate with a few less worries if you cover all bases of insurance. 


Shrinkage refers to the loss of inventory at some point from the purchase from your supplier to the customer purchasing an item. Obviously, this isn’t a great cost to deal with but it, unfortunately, does happen – mistakes are only human and sometimes can’t be avoided, even with the best workforce that there is, for example, loss or theft.

Payment Delays

If you’re a small shop you might not face this problem, as your customers will just be footfall that comes into your shop. However, if you’re a bigger business, you may be processing large orders that you’re allowing to be paid for by credit notice. As we mentioned earlier this could be 30 to 60 days, so when you’re accounting for your budget and quarterly finance forecast, be sure to factor these in. 

Banks can hold transactions and people can generally pay late, which definitely causes problems for your business. Although your payments may be late, your bills seem to never leave your account late, right? Late payments are annoying enough, but when they cause you to go overdrawn or miss payments yourself, there can be consequences. 

Outsourcing Professionals for Certain Tasks

As a small business, you’re likely to have a small team. Which is good for keeping wage bills down and reducing costs but it might leave you short on skills sometimes. This isn’t a problem though, we’re not expecting you to hire a team of superhumans who can do everything at once. 

Outsourcing is popular with smaller businesses, especially for one-off tasks. It’s a cheaper option than taking somebody on full time for a skill that you might not use all that often. For example, schoolwear and embroidery teams usually use a digital designer to help with their crest and intricate designs. Once they’ve received the file from them, they can use it forever then – so there’d be no point shelling out on an in-house graphic designer, would there?

Choose the Right Equipment For Your Uniform Embroidery Business

As we’ve mentioned, your equipment will be one of the biggest costs that you’re facing. Not just buying it but maintaining and upgrading too. Your most expensive cost as a uniform embroidery business will be the embroidery machine. It’s not only your most costly but your most important asset too. Without a machine, you have no product to sell. 

As it’s such a big part of your business, you can’t afford to take this decision lightly. You might not know which one is best for you – so that’s why we’re here to help. We’ve created a guide that compares single-head and multi-head machines. It poses all their benefits and different features so that you can decide on the right one for you. 

Grab your free copy today. 

Shopping Basket

Please note our Offices will close from 22nd December at midday and reopen on 3rd January
Please note the cut off for despatch for any orders is 18th December at 13:00 for Christmas Delivery.

Ask a quote