Phantom business costs.

Meredith Paige Avatar
Red stage curtain with a shadow of someone running across it.

Ramit Sethi often discusses how phantom expenses sneak into our personal lives and eat away at our budget. For example, replacing a roof 6 years after you buy a home is a phantom cost of homeownership.

Even when phantom expenses are predictable (the water bill, snow removal costs), they still might not be considered when making a change.

Phantom time-sucks also exist. It’s exciting to change the whole office to Apple products, but more time-consuming than you’d expect to port over the data.

So what seems like a time or money-saving move often becomes costly.

Here’s a partial list of phantom expenses my small business has incurred:

Phantom costs of hiring:

  • Time spent Interviewing, writing an offer letter, onboarding, setting up payroll, ordering an employee credit card, linking that credit card to Quickbooks, and refereeing drama between new personalities.
  • Money spent on employer’s matching contribution to social security, medicare taxes & 401K, increased worker’s comp insurance, dress uniform, new desk/stapler/pen cup, mistakes untrained newbies make, additional company car & car insurance.

Phantom costs of new software:

  • Time spent analyzing the needs, weighing pros and cons, training staff, devising workarounds for tasks it can’t handle, lost time on hold waiting for tech support, setting up auto-pay, revising the credit card in auto-pay once it expires.
  • Money spent on “upgraded” support once you realize the standard support will not do, and mistakes made before everyone is fully trained.

Phantom costs of a new conference table:

  • Time spent mulling table choices, unboxing it, putting the table together, trips to the hardware store for missing screws, breaking up the tomb-sized shipping box, and hauling the old table to the curb with a “Free” sign attached and dragging it back in when it starts raining.
  • Money spent replacing the old chairs that clash with the new tabletop, exotic wood table cleaner, sales tax, and shipping charges that weren’t included in the $499 advertised price.

We have a budget called “Stuff we didn’t think of” on our P&L. We use this category for problems we can’t anticipate and phantom costs we fail to consider.

And before making any change, we also think hard and brainstorm how the change will cause more work.

By being aware that there will definitely be phantom (time and money) costs anytime you make a change, you’ll likely be in a better position to evaluate whether the change still makes sense.

And at the very least, you’ll feel less frustration when the “time-and-money-saving” tchotchke fails to save you as much time and money as you thought it would.

Fun: My readers get a FREE copy of my book Drift: How to (accidentally) create a life you don’t want – click here – (use passcode: friend (all lowercase)

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