Ten ways your business wastes money
Looking to save some cash? With the end of the financial year fast approaching, it’s time to look at the business budget and work out where corners can be cut.
Running an efficient business is dependent on making calculated, and often difficult, decisions.
Here are 10 ways your business is wasting money:
1. ‘Deadwood’ staff
Performance strategist Narelle Lee says staff who are not engaged with the business and its direction cost companies dearly.
“They have low productivity and at the extreme, they are turning customers away or impacting the yield per customer,” Lee says.
Iain Bayly advises businesses to delegate.
“In some owners I see a reluctance to replace underperforming staff because they don’t like having tough conversations.”
2. Flashy fit-outs
Does your store really need whiz-bang signage and shelves or can it make do with the current facilities? If it’s just a matter of keeping up with the Joneses, Lee says it’s unnecessary.
“I see some quite expensive fit-outs that look great, but are not highly functional,” she says.
“If staff have to take three more steps every time they serve a customer, then that is lost time and efficiency.”
3. Unmeasured marketing
Analyse the return on investment your current marketing strategy is delivering. Could you be doing better? Creative consultant Steve Osborne says small-businesses owners need to constantly assess whether they are getting value for money spent on marketing.
“In their constant search for new customers, business owners are tempted by the latest, greatest, bright shiny tactic promising to boost revenue overnight,” he says.
“Much time, effort and money is wasted on chasing inappropriate methods and worse still, not considering any means of measuring return on investment.”
4. Refusing to outsource
Don’t get caught in the trap of thinking you’re a business superhero capable of doing every job. Recognise your strengths and identify your weaknesses. Outsource the jobs you know you cannot do and you will save money and time. Managing director of vendor finance firm Iain Bayly says the inability to delegate properly is one of the biggest money wasters for small businesses.
“I see that some tasks should be delegated and some should be retained,” he says.
“The areas that you should delegate are the cogs of the business, not the managing of those cogs. For example, bookkeeping, web maintenance, emails and social media.
“A virtual receptionist is only a few hundred a month, imagine how much you are worth by the hour then look at how many hours your working on roles that should be delegated if you want to exceed.”
5. Wasteful printing
If your business is still printing invoices and salary statements, it’s high time to review paper wastage.
6. Not tracking expenses accurately
Caught up in the hurly-burly of everyday business, it’s easy to let the finances slip. Accountant and small-business advisor Gabrielle Cardwell says the little things add up to big wastage.
“Businesses need to review their expenses monthly, cancel any services they are not using and track the ROI on their marketing,” she says.
“Too many small businesses don’t have a good understanding of where they are spending their money and how it is contributing to their revenue.”
7. Inefficient purchasing
Sometimes bulk purchasing is not the way to go, says Lee.
“Tying up working capital with slow moving items just because they were cheap and the rep said it was a good deal doesn’t make it so,” she says.
8. Believing you need to spend money to make money
Small businesses can easily pour money down the gurgler by spending up big on the latest and greatest equipment and technology.
“Start from where you are and invest as you grow,” Cardwell says.
“Small businesses should be taking advantage of free platforms and tools such as WordPress for websites, MailChimp for email newsletters and PicMonkey and Canva for easy, cheap DIY graphic design.”
9. Costly insurance
Like homeowners, small-business owners can save on insurance costs if they shop around. Lee advises using a broker to find the cheapest and most suitable coverage.
10. Outdated equipment
Is that fax from 1997 still hanging around the office? Are you actually using the landline? Cast an eye over your office equipment and work out what is earning its keep and what isn’t. It’s possible you are paying more in wasted energy costs to keep, rather than operate, old equipment.