Starting a small business is one of the most exciting journeys anyone can take. Being your own boss and creating something from scratch has never been more inspiring. However, alongside this new freedom comes a reality that catches many new entrepreneurs off guard: the actual cost of running a business.
In 2025, small business owners face a completely new financial landscape compared to just a few years ago. Inflation and technology developments play a role in shaping budgets. While it’s possible to run a lean operation, unexpected costs can quickly eat into profits if not carefully planned.
The key to long-term success isn’t just bringing in revenue; it’s knowing what expenses to expect and how to prepare for them. This blog will help you understand the real cost of running a small business.
What Expenses to Expect for Small Businesses
Work Premises
Even in the age of remote work, many small businesses still need a physical space. Whether it’s an office or retail unit, rent remains one of the largest fixed costs. What’s more, commercial rent prices are rising in most UK cities.
Alongside rent, utilities like electricity, water, and internet access are essential. For businesses with physical stock, heating or cooling costs may be another consideration – especially for warehouses or shops.
Managing Payroll
Unless you’re a sole trader, hiring employees will be your main expense. Salaries, pension contributions, and any other benefits must be considered. In 2025, competitive pay is often necessary to attract and retain the right staff, even in small businesses.
For startups with limited budgets, outsourcing can be a way to reduce costs. However, it’s important to remember that freelancers often charge premium rates, so the savings aren’t always as large as expected.
Software Considerations
From cloud storage to payment processing, technology costs are now a core part of your business operations. Many essential tools operate on subscription models, which can add up quickly.
Security is also becoming a bigger concern, with more businesses investing in cyber protection to safeguard customer data. Plus, with the introduction of GDPR laws, protecting your customers’ data has now become a legal requirement.
Getting Insured
One area often underestimated is business insurance. Whether you’re a sole trader or running a growing company, insurance helps protect you against numerous things.
Many owners are surprised at how affordable cover can be. In fact, business insurance can be as low as £7 a month. Including this expense upfront avoids nasty surprises later and gives you that much-needed peace of mind.
Growth Considerations
It should be obvious, but businesses can’t survive without customers. Attracting them often requires investment which, of course, adds to your budget.
Digital ads, social media management, and website upkeep all carry costs. While free marketing channels exist, a consistent budget for growth is often what separates businesses that plateau from those that expand.
Budgeting Smarter For Success
The real cost of running a small business in 2025 extends far beyond the obvious expenses. There’s so much that demands attention, but it’s the hidden costs that can trip up unprepared entrepreneurs. By creating a realistic budget, owners can not only protect themselves but also set a stronger foundation for growth.
Careful financial planning may not be the most glamorous side of entrepreneurship, but it is the part that ensures your dream business doesn’t just launch, it lasts. So, carve out some time and plan!
Chris Smith is a writer and a blogger that explores topics such as sports, finance, travel and business on his blog “Spend It Like Beckham”.