“Too much month at the end of the money” is a common lament both among regular wage-earning individuals and owners of businesses just like you. What’s also all too common is a sense of surprise when the money runs out.
Often, that surprise comes from not clamping down on basic business spending. It’s not the huge purchases that cause financial trouble for most companies: it’s the slow leaks and small wastages that add up over time. We put our researchers on the case and identified the nine most usual suspects found across most industries and many circumstances.
If you haven’t audited your finances for these repeat offenders recently, make some time this month to do so. The money you save will be your own.
1. Not Tracking Expenses
This is the most common and potentially most expensive way most businesses end up wasting money: simply not keeping track of expenses on a real-time basis. Sure, you have to come up with a total once a year for the Tax Man, but otherwise nobody really knows where the money goes.
Fix this by establishing strong expense reporting and accounting for every department, which somebody reviews once a week.
2. Wasted Employee Perks
Small perks like snacks in the break room, subsidized gym memberships or free Netflix for everyone can be an excellent way of showing your team how much you appreciate them…if anybody uses that perk. But if most of those morning bagels end up in the trash, and nobody even remembers where the gym is, cut those expenses.
Fix this by asking once a year who’s using what perk. Replace the dusty ones with something your team does want, or just leverage the saved money to become so profitable everybody gets a raise.
3. Supply Waste
Sometimes called “variable expenses,” this is all the stuff your team uses up over the course of a work week: pens, printer cartridges, toilet paper, paper cups, staples and the like. Each represents a tiny cash investment, but they can add up to serious wastage in a month, quarter or year. Most experts agree that getting employees to reduce usage is largely a waste of energy, making this one of the trickier items on our list.
Fix this by replacing as many consumable supplies as possible with less wasteful solutions. Ditch the water cooler for a bottle filling station. Pull the note pads out of the supply closet and switch your entire team to a free or inexpensive note-taking app.
4. Late Fees
Whether they’re from loans, on credit cards or with your utility company, late fees add up faster than you might think and are 100 percent avoidable. Most business owners with a late fee problem have that problem because they just don’t know all of their payment due dates.
Fix this by learning all of your due dates, then changing your accounting and payment procedures to match.
5. Trade Show Tactics
Trade shows are good for you. They put you in touch with some of the “right people,” provide inspiration and ideas and give members of your team a chance to bond. Also, they’re fun. But they’re expensive enough that doing them wrong can mean wasting thousands of dollars.
Fix this by going to just one or two shows a year, and going only to shows full of people who want to buy what you offer. Those shows where you’re surrounded by your colleagues and competition are usually a waste of time.
6. Never Negotiating
In the business world, no price tag is a firm or final offer. If you’re not negotiating virtually every vendor offer you receive, you are leaving money on the table. Many small business owners miss this opportunity because they expect negotiation to be socially uncomfortable, but trust us – it only feels that way the first few times.
Fix this by negotiating at least 10 percent off the next deal you make. While you’re at it, call three vendors in the next three months and re-negotiate the deal you made with them.
7. Poorly Targeted Marketing
There’s an old saw of marketing that says every business wastes half their advertising budget…but nobody knows which half. With modern tracking on the web, this just isn’t true anymore. Smart marketing goes to the right people with the right message, and gets adjusted in real time to make it even smarter the next day.
Fix this by eliminating all of your broadcast marketing in favor of targeted, pay-per-click and inbound messaging that reach the most interested and qualified leads in the most effective way possible.
8. TMT Disorder (Too Much Technology)
Sometimes this crops up because management is too excitable, or the techies on your team are too persuasive. Sometimes it’s an ego thing, where you can’t let your office fall behind the curve of consumable technology. In either case, its symptoms include more powerful equipment than the company needs, frequent upgrades of cell phones and monitors and profits lost with every passing quarter.
Fix this by putting your credit card away. If you “resemble this remark,” there’s not much you can do about the gear you’ve already purchased. Just promise yourself right now to only buy what you need moving forward.
9. Poor Time Management
If you’re not on top of your time, you can’t be on top of your money. Overtime-heavy scrambles for deadlines, rushed negotiations, late fees, inefficiency from haste and a plethora of other issues crop up when you’re in a hurry. In a vicious cycle, that poor time management usually means you lack the spare hours to see to number one on this list.
Fix this by budgeting your time as closely and effectively as we’re asking you to budget your money. It’s not as easy as we may have just made it sound, but it’s exactly that simple.
The reason many business owners miss these details is that it’s not the most fun part of the job. These aren’t innovative new products or exciting new accounts. They’re just the detail-oriented, nitty-gritty facets of keeping your business running and profitable. If you can get excited about them (or at least make yourself pay attention), you’ll have an advantage over all of your competitors who can’t discipline themselves to do this.
Of course, sometimes a budget shortfall happens even once you’ve plugged every leak in your expenses. Your business just needs a cash influx to maximize profits through expansion, new equipment or new processes. If that’s your situation, Kabbage can help you with a small business loan or line of credit.