Cut Hidden Costs Running Your Business to Maximize Profit

Do you know the hidden costs of running your business? To make sure your business is in profit, you only need to follow a simple calculation – are your incomes higher than your outgoings (costs). Of course, while the equation involved is simple, the reality of the matter is anything but. You will want to maximize profits for your small business.

After all, finding areas in which to cut costs can be a real challenge. Especially if you want to maintain the same quality of product and service.

However, the good news is that with a little smart thinking it is possible to cut costs even in the most critical areas of your business. 

Starting up an online business is a great way to work for yourself and earn some extra cash. It’s a simple job once you get the hang of it, and with hard work and dedication, you can earn great revenue.

However, one myth is that they don’t require any initial investment. In fact, there are actually quite a few hidden costs that you will need to be aware of.

Hidden Costs Running an Online Business

In this article, we are going to take a look at just some of them to maximize your profits for your small business. It may be hard to find the hidden costs of running your online business.

Want to learn more? Then let’s get started!

Marketing Expenses

Any business worth its salt will know that marketing is an absolute necessity for success. However, that doesn’t mean you have to throw money at your market budget willy-nilly. Indeed, marketing costs can add up and you must weigh this carefully against the return on the investment they provide. 

There are also specific tactics that you can use to reduce your marketing expenditure, without compromising the efficacy of your efforts. For example, why not make use of market segmentation, so you can customize your marketing specifically to the group that you are aiming for? Then you can use less effort, spend less money but still get the most effective return on your investment.

While you might plan on marketing your online business primarily through social media, you’re going to need to pay some money in order to get your name out there.

Whether it be outbound, inbound, traditional, digital, search engine, content, video, or influencer marketing, they each have costs that you’ll need to prepare for. While they are essential, it can take a while to find out what works for you.

Everyone’s business is different, so you’ll have to develop a marketing plan.

Payments to Maximize Profits for Your Business

It costs your business money to make payments to your suppliers. Indeed, the process of making payments can be a time-consuming and expensive one that uses up valuable person-power.

Additionally, if you wish to optimize your payments to save as much money as possible by grouping them, or using specific platforms preferred by your supplier, it can take up even more time! 

The good news is that automated secure payment optimization can help here. Indeed, by automating this process, you can make sure that every payment is the right type, is sent to the right place, in the right format, and to the right recipient automatically.

Thereby saving you precious time and money and helping to keep your costs down.

Logistics of Shipping and Delivery

Another hidden cost that you may have to prepare for is delivering your products. For instance, parcel shipping can quickly add up to be a significant expense if you decide to offer it for free.

You’ll need to analyze your individual requirements and look at different companies to find the best costs possible. It can certainly be time-consuming.


Getting your products from your facility to your customer is one of the most vital steps in running a successful business. After all, if a customer has to wait longer than they would like, or experiences difficulties with their delivery it can undo all that hard work you have done in forging a positive and trusting connection with them. 

It is this argument that spurs many businesses to invest heavily in their logistics infrastructure, something that can be very costly indeed with the prices of vehicles, fuel, and maintenance. However, it pays to remember that handling logistics in-house may not always be the most cost-efficient option. 

Indeed, for many businesses, especially small to medium enterprises, the cost of running their own logistics arm outweighs the benefits of staying in control of their deliveries. Instead, it may be best to outsource deliveries and logistics to an independent third party that has the infrastructure already set up to manage your needs.

After all, by using the services of a logistics specialist or freight forwarder you will be able to ensure fast delivery for your customers, while also benefiting from the reduction in cost that not running your own vehicles and infrastructure will enable. 

Recruitment and Retention to Maximize Profits

Now, you may be expecting to hear that the best way you can cut costs in these areas is to reduce wages and salaries. However, that is often a false economy over the long term.

This is because for your business to be successful you will need to attract and keep the best people, and low wages do not do this. Therefore you can end up attracting people that applied unsuccessfully elsewhere, which means your business could suffer. 

Additionally, it is wise to remember that filling a role, when a valuable member of staff leaves can be both time-consuming and costly, what with all the costs involved in recruitment and the hit to productivity you will suffer. With that in mind, offering your staff good wages and benefits to keep them motivated and committed to their role can save you a great deal of cost in the long run. 

That means you need to make sure that your wages are competitive, and that you offer great benefits in addition to medical and dental. Such benefits may include offering free gym membership, company counseling services as well as yoga and meditation sessions at work.

Some companies are even offering employees benefits like recipes boxes at a discount which are particularly popular because they have a direct positive impact on workers’ quality of life. 

Domain Hosting – One of the Hidden Costs of Running Online Business

Even if you decide to design and build your website yourself without assistance, you still need to pay for domain hosting. The cost of this will depend on your business itself, but it can be quite costly for those that are starting with nothing.

Cheaper hosting that is shared can be found between $2.49-$15, but dedicated hosting can cost between $80-$750 a month.

You’ll need to do some research to find something that is right for you.

Permits and Licensing

Most people think that only physical stores need specific licensing, but online businesses also have to prepare for this. Depending on the type of service you are offering, you may need a permit.

You will most likely be required to register for sales tax and obtain a general business license.

While it will vary depending on your state and district, it’s something you’ll need to look into. Failure to follow the rules could result in some heavy fines.

Most people think that only physical stores need specific licensing, but online businesses also have to prepare for this. #onlinebusiness Click To Tweet

Technology as Hidden Costs of Running an Online Business

One of the most important things you will need to run an online business is the appropriate technology. This doesn’t just include a computer, but also a stable WIFI connection, telephone, printer, and any other essential equipment.

While you might think that any old laptop will do, everything needs to be reliable. This helps you manage your store effectively, and you’ll be able to keep in touch with your customers.

The last thing you want is to develop a poor reputation because your WIFI cut out during an important phone call.

Software Expenses

Alongside the physical technology that you will be using, you will need to pay for software to help manage your online business. This includes e-commerce software as well as subscriptions that will allow you to be more productive and efficient.

From accounting to communication platforms that assist you with project management, they are a significant monthly expense. Take a look at this commonly used business software to get started.

You can cut costs by comparing and choosing ones that are suitable for you.

Bank Fees Are Hidden Costs of Running an Online Business

When you’re taking payments online, you’re most likely going to be charged some type of transaction fee. It’s not going to seem like much at first glance. However, when you add it up over time, it can be a significant amount that will come out of your profit. Therefore, consider using a credit union locally.

It’s essential to prepare for it so that you can develop an appropriate budget to manage your finances. You want to find out your total income before you start using your money for other things.

avoid bank fees

Don’t forget to calculate tax and any additional professional fees too.

Insurance Costs Part of Hidden Costs Running an Online Business

Much like licenses and permits, you might think that insurance is only required for physical spaces. However, it’s still essential to have it, even if you are only operating online.

General liability, product liability, and business interruption insurance keep you covered just in case of an accident or emergency. Trust us when we say it’s better to pay the fees than to end up with significant losses.

You’re securing the future of your business with insurance.

General liability, product liability, and business interruption insurance keep you covered just in case of an accident or emergency. #insurance Click To Tweet

Employees or Freelancers Can Help Maximize Your Profits

If you’re only just starting to run an online store, you probably don’t have to worry about paying anyone’s wages but your own. However, there could be a circumstance where you need to hire some extra assistance as time goes on. They can save you time and maximize your profits by being able to concentrate on other areas of your business.

This might not necessarily be a physical person but could include outsourcing as well. For instance, IT support, bookkeeping services, tax agents, virtual assistants, graphic designers, and social media managers all have their own fees.

It’s certainly something you’ll need to take into consideration, especially if you already see signs of growth.

Office Space/Utilities to Maximize Profits

Even a business that starts from home still requires some type of space. If you haven’t already got a home office set up or an area to make your products, you’ll need to consider that expense.

Alongside the cost of supplies, you’ll have to remember that your utilities such as gas, water, and power may be increased. If you’re searching for office space, rent will also have to be factored into the equation. It all adds up and can take quite a big chunk out of your profit.

In Conclusion

And that’s it! These were just some of the hidden costs of running an online business. Knowing what they are you can help elevate these hidden expenses to maximize your profits.

It’s a lot to take in, but it will all be worth it. It just requires dedication and hard work. Have any expenses surprised you in your business? I’d love to hear about them in the comments below.

Lisa Sicard
  • Cristina says:

    This is a comprehensive list, Lisa. It’s easy to get into a spending frenzy, especially if you are a funded startup founder, but then, when you start adding all those costs you’re mentioning, a surprising amount appears.

    • Lisa says:

      Thank you Cristina, welcome to Inspire To Thrive. Oh yes, spending more can quickly get out of control. You really have to be rigid with your budget to ensure profits will last. Thanks for coming by and have a great day Cristina.

  • Moss says:

    Hi Lisa, Ryan made exciting points here, and if you think about it, he’s so right. You pointed out that most people believe that investing in a business, such as paying for a license, is only for physical store owners. Many in the blogging industry have the same mentality. As Ryan noted, they believe everything about blogging is free, get a free website, and more. But you need to invest in yourself to hone your blogging skills. However, that does not mean you shouldn’t cut costs. To grow your business, you must make investments. But look for intelligent ways to cut costs by making wise investments. For example, there are several web hosting providers; look for reliable, low-cost hosting services and pay for their services. I was hosting my site on Siteground, but since the hike in price, I moved to HostGator. The same applies to other areas of business.

    • Lisa says:

      Hi Moss, yes, he certainly did make an excellent and exciting point here. I believe the only way to make money is to invest some in yourself and the business and work hard. I did just the opposite of you – I went from Hostgator to Site Ground because I needed more space and I may need to move again in the near future. Having my techie look at it this month for me here. Thanks for your input Moss and have a great day.

  • The thing so painful for new bloggers – and online business owners in general – to understand is that at a minimum, unless you invest in a domain and hosting, you will never be able to scale effectively. We see so many new bloggers trying to begin blogging for free, with zero financial investment. Even if they have scant success, reaching the next level requires investing money in a domain and hosting….or else, they fail and quit. No one does this seriously on cyber real estate owned by another person. Mark Z built FB on Facebook dot com, not Blogger, LOL. Fab points Lisa.


    • Lisa says:

      Hi Ryan, oh yes, many new bloggers think everything is FREE. Even our time is worth money. I was one of them over 10 years ago 🙂 And now we can’t depend on Mark Z’s site as he owns it – not us. Many bloggers and businesses don’t understand that and think their business can survive on FB only. Until they get banned or suspended one day, even if only caught up in the bots. Been there, done that! Thanks for your input on this Ryan and have a great day ahead.

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