When it comes to running a business, passion and motivation are vital, but it’s important to remember that, without cash, you can’t get anything done. Because of this, you must manage your money well and do what you can to stop wasting it.
Regardless of how it may seem sometimes, your money can’t just vanish into thin air, so when you start running low, it’s because it’s being spent somewhere. Lack of cash can cause a lot of harm to your business, going as far as to threaten its future, which is why you need to need to locate any financial leaks and block them up. Here are ten ways your business could be losing money.
1. Renting Office Space
Renting your first office space is an incredibly exciting and fulfilling process. For the first time in your company’s history, you will have somewhere to truly call your own. However, it’s vital that you only look for offices if you really need one.
If your’s and your employees’ work can be done at home, then you should try telecommuting. This means you wouldn’t have to pay for rent, utilities, or office supplies, and you and your employees wouldn’t have to waste fuel commuting to work.
2. Mixing Your Money
When you first started your business, one of the first thing you should have done was set up a separate account for your company. If this is something you’re yet to do, then you need to get on it right away.
Mixing your personal and business finances can prove to be a huge mistake, as it makes it difficult to determine what money is yours and what belongs to your company. This means you could end up overspending, either way, leaving your or your business out of pocket.
3. Hiring Underqualified Employees
Most entrepreneurs start their businesses alone, but, at some point, you’re going to have to start hiring employees to help you with your workload. When this time comes, it’s vital that you hire the right people for the jobs you’re advertising.
There’s absolutely no point in hiring underqualified individuals, as this means you’ll have to pay someone that can’t do the job correctly. This will affect productivity and efficiency, which will impact customers, causing you to lose sales.
4. Hiring Unnecessary Employees
Although you are going to require a few permanent employees, this doesn’t necessarily mean that you need to hire an entire team of staff right away.
The hiring process itself is pricey, and with a salary, benefits, and rewards, the costs keep adding up. To avoid this, you should consider outsourcing specific tasks and responsibilities to agencies and freelancers. This way, you won’t have to pay benefits, but will still receive the high quality work you need.
5. Wrongly Priced Products
As hard as it is to admit, you may be overcharging your customers for the products or services you provide them. That being said, you may be undercharging them too. Either way, your wrong pricing could be causing you to lose money, leaving yours massively out of pocket.
To avoid this, you need to conduct some research and come up with a fairer price. Make sure that you remain affordable to your customers, but also charge enough to make a profit.
6. Neglecting Your Accounting
When you run a business, proper bookkeeping and accounting is an absolute must. After all, if you don’t keep track of your money and manage your finances well, then you’ll never be able to spot the areas you’re losing cash.
Unless you’re trained in accounting, this task may be too much for you, in which case you should consider hiring a professional accountant. They’ll be able to support you through all of the complicated processes and help you save in the long run.
7. Badly Executed Marketing
You could have the best employees, customer service, and products on the planet, but, unless people know about your business, you aren’t going to make any money.
This is why marketing is so important. That being said, you should avoid executing poor marketing strategies that don’t target your audience. This won’t accomplish anything, meaning you may as well have thrown the money away. Be sure to conduct market research and find tactics that work for your customers.
8. Fraud And Theft
When you own a business, you’ll always be a target for fraudsters and thieves, and, although losing money this way isn’t necessarily your fault, you’ll still be to blame if you leave your company vulnerable. This is why you need to invest in proper security measures and speak to professionals, like cybersecurity company Fraud Watch International.
You should also train your staff on how to spot suspicious individuals and introduce policies on what to do when they do.
9. Regular Small Purchases
When you’re running low on coffee or pens in your office, chances are, you send an employee out with the business credit card to go and pick some up. This will only cost you a few dollars in the short term, but if you think about how often this needs to be done, you’ll realise how quickly these small purchases add up.
To save yourself time and money, you should buy in bulk over the internet. This way, your employees don’t have to run to the store, and you get a fair discount.
10. Poor Time Management
In the chaotic and busy business world, time is just as valuable as your money. This means that, when you waste your time or fail to manage it effectively, you leave yourself out of pocket.
With that in mind, you need to make sure that you take control of your life and do what you can to be a more productive and efficient individual. You can start by cutting out distractions, like your phone and other technology. You should also delegate any tasks you don’t need to complete personally.
Lots of businesses overcome financial hardships, but many more go under as a result of them. To avoid this, you need to do what you can to lose less money and cut costs.