When it comes to running a business, you generally have to spend money to make money. You have to be careful about how much you spend, though. It’s easy to overspend and waste your money on unnecessary items, putting your business in a tight spot. There are a number of reasons that a business might fail, but some of the biggest are due to money problems.
Approximately 82 percent of businesses experience cash flow issues, and 29 percent run out of cash completely. What is it that causes businesses to struggle with cash flow and run out of money? There are a number of factors that can contribute to a businesses’ financial trouble but overspending and wasting money on unnecessary expenses is one of the biggest culprits that most business owners don’t even think about or realize could be causing so many issues. If your business is in a hard financial spot when it shouldn’t be, or you simply want to stay on top of it to ensure you don’t go under because of overspending, you can evaluate your spending in the following areas, (some of the biggest areas that companies waste money in), and work on cutting down costs.
Depending on the type of business you do, you may need to have a credit card processor in order to offer your customers their preferred payment method. However, you could be spending a lot more on payment processing than you might think. As convenient as paying with a card may be, it can also be costly, so if you’re paying and accepting payments for bills and invoices via card unnecessarily, you’re probably wasting more money than you need to be.
Instead of using a card to pay for all of your invoices, you may want to consider eChecks. They work just like traditional checks but have the added convenience of technology and can be emailed for instant delivery. Cutting back the number of checks you write with eChecks will help you save money on envelope stuffing.
Employees are a necessary expense when it comes to any business, but the number of employees that you have may be more than needed. It’s never easy to go through and cut down your staff, but if you don’t conduct audits, you could be losing a lot of money by paying the salaries and for the benefits for employees who don’t have enough work to do and/or whose work could be done by someone else. Taking the time to evaluate each of your employees, their work, and their salary requirements can help you determine ways that you can save money but cutting down unnecessary staff and putting that money towards employees who are adding value or putting it back into your business.
Last year, US businesses paid for 462 million business-related trips within the United States. Worldwide, businesses paid out over $1 trillion towards business travel alone. While it’s natural to want to feel comfortable when travelling, whether for business or for pleasure, many times people will be more willing to spend money when they’re traveling on the company’s dime, rather than on their own. This means that your company could be losing a lot of money unnecessarily when sending employees travelling.
While you don’t have to go the cheapest, (and typically least comfortable), route possible when sending people traveling for business, there are a number of ways that you can save. By booking as far in advance as possible you can get great deals, but you can also try putting employees in an Airbnb rather than a hotel or having them take an Uber instead of renting a car. You may even want to consider letting them book their own accommodations and giving them a certain amount that they can spend—they can try to stick within budget, or they can opt to spend their own money over the amount they’re given to make their trip a little more comfortable for them.
Marketing is a necessary expense and you should absolutely be putting money into it. You could be wasting money, though, if you’re not putting your money into the right kind of marketing. For example, if you’re spending thousands of dollars on billboard advertising each month, but you do the majority of your business online, you’re throwing money down the drain. Instead, you should be focusing your efforts on SEO, PPC, and other online marketing tactics that will draw in your target audience and give you a better ROI.
If you’re not sure which marketing tactics are best for you and your business, you may want to consider consulting a professional. It’s worth it to get the right kind of marketing and exposure.
It’s natural to want a beautiful, clean, comfortable office, but it’s also easy to go overboard. Too often, businesses will end up in spaces that are too big and too expensive for them, all for the sake of appearances. If you have clients who come into your office regularly, you’ll want a space that is presentable to them, but that doesn’t mean it has to be over-the-top and costly. Sometimes all a space needs is the right shade of paint and decorator.
If you don’t have a lot of clients coming in, that doesn’t mean you have to settle for a terrible office either. Mainly you’ll want to look for a place that’s in your price range and isn’t too big. If your lease is ending soon or you’re just looking at buildings now, you may need to consider downsizing in order to save some cash.
Although you need to spend money in order to keep your business running, you need to be conscientious about the spending that you do to ensure that you don’t waste money unnecessarily. Travel, payment processing, and your office space are just a few areas in which it’s easy to overspend without realizing it but evaluating the amount of money going to each area of your business can help you get a better idea of where your money’s going and keep it under control.
What area do you think you’re overspending unnecessarily in?