If you've been in business for any amount of time, you've no doubt learned (the hard way) that it's far too easy to waste money. Wasting too much money could be keeping your business from achieving its full potential, or worse: killing it altogether. Following are 10 money wasters to avoid.
1. Unneeded Travel
Travel expenses can add up big-time, especially if you are attending industry events. Conferences can be quite costly. Throw in air travel, accommodations, food and drink, cab fare, etc., and these business trips can set you back more than you bargained for. It's true that these events can be beneficial for networking and educational purposes, but could you learn and/or network just as much online without all the added expenses? Some business trips are absolutely necessary, but before you start shelling out cash, ask yourself if it's really worth the expense.
2. Office Space
How much office space do you really need? Are you leasing far more than needed to accommodate your staff and equipment? Consider the cost of the space itself as well as all the costs associated with keeping your business up and running there.
Do you need office space at all? For some businesses, work can be done from your home and/or remotely from your employees' homes. Eliminating an office altogether is not the right move for everyone, but if you can imagine your work being just as effective without office space, it's worth considering because it could save you a great deal from month to month. Keep in mind, you can always utilize online meetings and phone conferences if need be.
3. Ineffective Advertising
Ineffective advertising can be a major cash drain, and it's a trap that all too many businesses fall into. Good advertising isn't cheap, so when you do drop money on it, you should make sure you have a solid plan for maximizing your ad spend. Strategies will, of course, differ by business, industry, location, geography, target market, etc. It’s wise to do your homework before diving in head first. Research to see what has been effective for competitors or other similar businesses, and make educated choices. Be sure to review your advertising on a regular basis instead of signing up for ad coverage and letting it automatically renew. If an ad campaign isn’t producing results, know when to pull out and try something else.
4. Small Purchases
Small purchases are those things that never seem like much of an expense when you're buying them. The problem is that nobody is keeping track, and they can add up more quickly than you expect. Whether it's office supplies, breakroom snacks, job listings, printing, toner cartridges, etc., make sure it's all being recorded and accounted for (and set some limits). Late fees and service changes can also add up, so review your expenses to make sure invoices and credit card bills are being paid on time. Like a small water leak that ends up tripling your monthly bill, these minor money leaks can cause major problems if not kept under control.
5. Social Media
For most businesses, it’s a good idea to have a social media presence, but be careful how much time and how many resources you dedicate to it. Social media isn’t always free. For maximum effectiveness, you may need to pay to promote posts, which should be considered part of your ad spend. A Facebook page or Twitter account that’s seldom monitored or updated may reflect poorly on your company, but if an employee is spending part of each day updating social media posts, that time could be spent on other tasks that might bring in more money to the company. Take time to periodically review your social media presence to make sure it’s producing enough return on your investment.
6. Extravagant Website
Are you paying a lot of money for the creation and upkeep of a fancy website? It may be time to explore less expensive options. More website tools are available online than there used to be, and many of them make it astonishingly simple to make and run a website with minimal fees. Explore your options and see if you can maintain a web presence for less money.
If you have inventory that's just not moving, and shows no signs of doing so, it's probably time to consider clearing it out to make room for more lucrative products. Have a clearance sale with deep discounts, or at the very least, you can donate extra inventory to charity for a tax deduction. Once you’ve uncluttered your shelves, adjust future orders accordingly to help keep the problem from reoccurring.
8. Unneeded Software
Are you keeping tabs on all the software your business has purchased? How many programs are you using that cost you a recurring fee? Out of these, how many are critical to your operations? Are there free — or at least cheaper — alternatives? Are any of the programs outdated or obsolete? Stop throwing money at software you don't really need. It's just one more area where money is trickling out.
Nobody likes to think about layoffs, but if you're cash-strapped, and overstaffed, it's simply something that needs to be looked at. Perhaps you didn't follow through on plans that called for a bigger staff. Maybe you once needed employees for a project that is completed or for a major client you no longer have. At the very least, you have some evaluating to do. Keep your top talent no matter what, but if some of your workers are continuously searching for tasks to work on, this is a sign that some cuts might be in order. Depending on the benefits you offer, this can free up a substantial amount of money on a regular basis.
10. Wasted Time
The old adage that “time is money” is as true now as it ever was. Employees may waste the time you’re paying for by taking too many coffee breaks or surfing the web on company time. Or, they may not have the tools they need to operate effectively. It’s up to supervisors to not only keep an eye on employees’ time management, but also to ask for feedback on how to speed up processes to accomplish more in less time. Owners and managers can also misuse their time by performing menial tasks instead of delegating them to others so they can concentrate on building their business and increasing its bottom line. Time management is an important part of money management.
Review this list of money wasters, determine if any of them apply to your company, and see how much you could save by changing a few processes.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.