Small business: Planning for budget increases in 2015

Many companies have started planning their budgets for 2015. While it's not always easy to estimate costs, going through the planning process can help give businesses a better handle on their finances.

Line items that may cause a greater strain on budgets next year include health care, shipping and travel, experts say.

Health insurance costs "are a huge unknown for small businesses," says Caroline Grimm of Bridgton, Maine, author of "Stop the Cash Flow Roller Coaster" (Amazon; $19.95).

For 2015 the New York State Department of Financial Services has approved an average 5.7 percent premium rate increase for individual plans and 6.7 percent for small group insurance. For details by carrier, see nwsdy.li/insurance.

There are many variables, "but expect to pay more," says Barbara Weltman of Vero Beach, Florida, author of "J.K. Lasser's Small Business Taxes 2015" (Wiley; $22.95).

In addition, business insurance policies, including coverage for liability and property damage, could rise by about 3 percent, says Weltman, who offers a 2015 budgeting forecast at nwsdy.li/budget.

Pay, shipping going up. Other areas of potential increase include payroll, with salaries expected to grow about 3 percent across most industries, and postage and shipping costs. The U.S. Postal Service says there will be no postage increases in January, but rates could increase later in the year, Weltman says. FedEx is raising rates by 4.9 percent across the board in January, she notes.

And business travel spending is expected to increase by up to 8.6 percent in 2015, according to the Global Business Travel Association Foundation and Carlson Wagonlit Travel.

Energy costs going down. But some costs may go down. Energy is a bright spot, says Weltman, with the cost of heating oil and gasoline dropping because of the recent plunge in world oil prices. Prices for personal computers, tablets and smartphones continue to decline.

When the dust settles, companies facing higher budgets for next year may look to cut costs rather than raise prices for their customers.

"There will be a lot of resistance to paying more for your product or service from consumers," says Port Washington-based Irwin Kellner, chief economist for MarketWatch.com, a financial news website.

While the nation's economy has improved, economic growth for this year as a whole is relatively low at about 2.5 percent to 3 percent on average, says Kellner, who doesn't expect it to be much better next year.

Tough marketplace. "Try to be more efficient in your operations, because that's the only way you're going to make money next year," he notes. "Be careful in terms of what could trigger high expenses for you, because you can't recoup them in the marketplace."

When Grimm works on budgets with clients, she generally creates three budget scenarios: "Optimistically I call it good, better, best, and pessimistically I call it bad, worse and shut the front door."

For instance, what if your material costs rise 3 percent, 5 percent or 10 percent? You need to develop scenarios to deal with that.

Evan Bloom, co-owner of the Westbury, Hauppauge and Melville franchises of Sir Speedy, a national printing and marketing services company, expects budget increases for 2015.

Renewal isn't until May, but he's already gotten a letter from his health insurance company warning there could be double-digit increases. Paper prices are a big variable, too; he says he tries to negotiate with suppliers for better pricing.

"We always expect a certain amount of increases year after year," Bloom says. "The bottom line is you need to look at your financials."