Wasting money is usually the first thing that any business should avoid. However, small businesses tend to waste a surprising amount of money on completely predictable things. Here are several common ways small businesses waste money and also tips on how to avoid making these money mistakes at your small business:
Not Tracking Every Little Expense
Even if you are running a tiny corner grocery store, every little expense must be tracked. Whether you are buying boxes of new merchandise or a $10 stapler, these expenses must be listed. Businesses are good at tracking income but can be lax when it comes to keeping track of expenditure. Without a detailed list of expenditures, it’s impossible for a small business to know how profitable it is. Not tracking expenses also indicate a larger management problem. A small business like this is bound for failure. To avoid this scenario, small businesses should develop a reliable system of tracking all expenses, preferably with a help of a business consultant. Consultants like CBS-CBS.com have great tips on how to develop an expense tracking system that doesn’t cost anything.
Hiring Full-Time Employees When Not Needed
If you need to occasionally design a new graphic for your small business, you don’t need to hire a graphics designer full time. It’s a job that can be easily outsourced. Likewise, if the company has tasks that are cyclical or seasonal, then hire contractors, freelancers, or otherwise outsource the task to save money. Don’t hire full-time employees unless they have things to do as the salary justifies. Don’t hire full-time employees anticipating that you may need to utilize them sometime in the future. When the need for the job comes, there will be plenty of applicants. Don’t waste money now.
Under-using or Overusing Technology
Does your office really need a $1,000 laser printer, when a $100 inkjet printer would suffice? Overreliance or under reliance on technology is another common reason companies waste money. Some small businesses waste a lot of money buying fancy equipment that is ultimately not necessary. Then there are other businesses that do not invest in the right technology, believing to be saving money. The business should strike the right balance in deciding which tech to spend money on, and which to avoid.
Inefficient Marketing Spending
Marketing is the most common area businesses spend money on. Small businesses often have limited budgets to spend on marketing. Therefore, the money available should be used wisely. Before splurging on a new marketing campaign, decide which channels are most likely to show good ROI. Spend money on these channels only, and avoid the others.
Short-term loans, sometimes known as microcredit loans or payday loans, are nothing more than debt traps. Small businesses may take out short-term loans in hopes of investing, only to be crippled by debt with sky-high interest rates. Therefore, when in need of money, take out reliable small business loans. Don’t fall for easy loan scams run by loan sharks.
Be careful how your small business spends money. Invest in efficiency to increase profits and success in the future.