When making a budget, business owners may account for some of the more obvious expenditures, such as payroll and production costs. However, some important expenses might be overlooked—which can significantly impact the health and longevity of a business.

To help you create a more accurate business budget, members of Young Entrepreneur Council discuss some of the less obvious costs of running a business. From professional development to software upgrades, make sure your budget accounts for these key expenses.

What's one expense entrepreneurs need to make sure they budget for each year but that they might easily overlook? Why is it so important?

Way too many people go into business making decisions around profitability without thinking about their own basic needs. You do not necessarily need to pay yourself, but you should be part of the equation. If you are making pricing decisions, contract decisions, or expense decisions without thinking about paying yourself, you are making a mistake. 

Budget for unexpected opportunities. Having such reserves allows for seizing arbitrage investments without compromising existing budgets. It's a strategic allocation of your capital, ensuring flexibility and the ability to take advantage of unforeseen and unplanned opportunities while fostering business agility. 

Budget for annual bonuses and team-building initiatives. Most businesses distribute a profit share or fixed bonuses annually and organize activities (such as a holiday party), without budgeting and allocating this throughout the year. This can quickly jeopardize any form of profitability assessment or financial targets early in the year and tank the cash deposits when the time comes. 

To grow a business and survive the competition, you have to get acquainted with the needs of your customers, analyze competition, and be familiar with ever-changing market trends. This requires extensive research. So, you should have a clear idea of the funds and resources you may need. 

Business owners should not overlook budgeting for business insurance each year. This includes general liability, professional liability, and property insurance, which are essential for protecting against lawsuits, accidents, or damage. Adequate coverage is vital to prevent financial losses from unforeseen events. 

Business owners should do their best to allocate a budget for annual professional development, a sometimes overlooked but vital investment. This allocation is important due to the ever-changing business environment. It enables entrepreneurs to stay competitive, adapt to industry trends, and remain up to date with emerging technologies, contributing to personal growth and the long-term success of their businesses. 

It’s important for business owners to budget for unexpected costs. This strategy will keep things running smoothly, even when unforeseen expenses come up. 

Business owners frequently overlook the need for robust cybersecurity measures. With the rise in digital threats, it’s important to invest in cybersecurity tools that protects sensitive data, preserves your business reputation, and prevents costly breaches. Prioritizing this expense ensures long-term viability and safeguards against evolving cyber attack risks. 

Entrepreneurs should consider budgeting for networking events that they will be attending. Sometimes, these costs can end up very high if not planned for properly. Every entrepreneur should attend events to grow connections, and budgeting for them helps everyone to decide the right events with the right ROI. 

For any company in the tech sector (as well as others, such as pharmaceuticals), research and development is an essential expense. You may not overlook it completely, but it's easy to underestimate the time and cost of doing thorough research on every detail regarding a product or service. For example, it's important to do testing, surveys, or focus groups to test the customer experience for products and services. 

Many business owners budget for the initial purchase of equipment and software, but then overlook the need for regular upgrades. However, outdated equipment and software can lead to decreased efficiency, increased downtime, and potential security vulnerabilities. 

One expense many business owners find out about the hard way is taxes. You should always have an account put aside for taxes. Between property, income, sales, and other business fees, you could owe a lot more than you think. Don't get caught off guard, and always hire a professional to help guide your business’s tax filing.