By Jake Waller

You know that small business life isn’t easy. You’ve likely seen the gloomy statistics that only half of small businesses will make it to five years of operation. And even if you’ve passed that milestone, every day, the competition gets fiercer as over 500,000 new businesses are started each month.

Understanding and managing costs is a crucial aspect of small business management. And while there are some obvious costs to running your business—payroll, inventory, overheads, and taxes—it is the hidden costs that have the potential to be more dangerous. Left unchecked, these can eat into your budget and slowly grind your business down.

Managing your company’s hidden costs could be the key to survival. And with that in mind, we’ve brought you advice on how to effectively track the hidden costs many small businesses overlook.

Keep records of your permits, licenses, and memberships

To start operating and continuing to do so, your small business is likely to need an array of permits and licenses. These are typically recurring costs, but will often be set up, scheduled to renew regularly, and forgotten about. While you won’t typically have much scope to save money on these expenses, it is important to know exactly what you’re paying and when.

Memberships are likely to be similarly regular costs, but you do have more of a choice over them. Networking organizations can be worth their weight in gold if used correctly, so keeping track of what memberships your business has and remembering to use them is the most important thing. Being a member can also offer business-related discounts on everything from insurance and loans to training and supplies, so be sure to find out exactly what you’re paying for and make the most of it.

Get smart about energy if it’s not in your lease

Many businesses will rent their premises, either from building owners or a dedicate office space firm. These deals normally include utility costs as part of the leasing agreement, and so short of moving premises, you’re unlikely to find any savings or be surprised by hidden costs here. You will, however, know exactly what your leasing costs will be.

If you own your business property, or your lease doesn’t include utilities, you have more potential for both finding great deals and receiving unpleasant surprises. Shopping around for the best energy deals is a smart choice and installing smart meters can also help you understand where your day-to-day energy costs are coming from.

Track employee happiness to keep turnover low

Employees are worth keeping happy, as hiring new talent is expensive. Keeping them satisfied and thus retaining employees for longer is almost always a more cost-effective strategy. That means providing your employees with additional benefits beyond their wages. These require investment, although it may not always be straightforward exactly what those costs are. Medical plans and office equipment might be simple expenditures, but others, like flexible working options, are harder to define.

By tracking employee satisfaction and turnover, you can get an idea of how well your benefits are doing at keeping your employees around and avoiding additional costs from more frequent hiring.

Evaluate your suite of tools

Tools can make many aspects of your business easier, from providing employee benefits to processing payments. And while most will seem like a great idea at the time you come across them and sign up, not all the tools your business has it its disposal will see regular use. Keep a record of what tools your business has—be it subscriptions to a software as a service apps or physical tools on-premise.

You may be able to cancel subscriptions you don’t need or find a new solution that can combine functionalities. Online scheduling tools like Findmyshift can work as a rota, message board, payroll calculator, leave calendar, and more. And physical tools can be rented out during times they’d otherwise be inactive, or even sold if you no longer need them.

Stay on top of shrinkage

Shrinkage is loss of inventory and is most prevalent in retail stores, but it can affect many businesses. The reasons for it range from administrative errors and breakages to shoplifting. While hard to eliminate, it can at least be measured so that you’re aware of the costs and can plan accordingly. You may even be able to work out the main contributing factors and look to reduce them.

Be honest about your own time

One of the biggest hidden costs for small businesses and one of the hardest for many entrepreneurs and owners to track is their own time. It’s easy to succumb to the pressure of always having something to do and working all hours of the day to ensure things get done. This can lead to fatigue, burnout, and compromised performance.

It’s important to be honest about your workload, and the first step is to track this. Record your hours and identify any activities that could easily be delegated. While handing over responsibility is difficult for many people in small businesses, doing so is essential so that you can stay on top of the most important things without worrying about every minor detail.

By keeping track of your company’s hidden costs, you’ll be able to better understand your business and prepare it for growth and future success.

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Jake Waller uses his background in engineering to simplify complex topics for a variety of tech firms. He covers employee engagement and productivity tips for small business managers.