Not always as advertised: Some investments come with unexpected costs

March 30, 2012
Not always as advertised: Some investments come with unexpected costs

Any time a business invests in something – a product, a service or even an employee – there will always be an expected cost attached. Business decision makers who stay within the parameters of their budgets understand that doing so requires careful planning and, in many instances, a consideration of unexpected related costs. contributor Mark Davis wrote last week that the “snowballing” effect of purchases can lead actual costs to greatly outpace the advertised or expected price of a product or service.

“While getting a new TV for the conference room seems to balance in your checkbook, you must also factor in the cost of installation, the complementary speakers, monthly cable fees and maintenance,” Davis, CEO of social media startup Kohort, writes. “The full cost of ownership might not fit into a bootstrapper’s budget.”

Financial planners and CFOs who do not look far enough down the road could place their businesses in dire financial straits. Once committed to a product, service or employee, the organization may already have reached a level of commitment that makes it impossible to transition away – the initiative either needs to be scrapped entirely, thereby beginning the process again, or additional resources could be poured into the initiative, which could further sap the company of vital funds that could be better used elsewhere.

When headhunting CFOs and recruiting accountants, a business should seek finance professionals who are able to produce meaningful work related to a company’s business dealings, while also looking to the future as business plans and expected expenses are considered. Finding business professionals with these dual skill sets could be challenging, but experienced finance recruiters can expedite this process with care and precision.

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