As a small business owner, you can’t afford to waste any money. Every cent matters when it comes to keeping your business competitive and growing. If you want to survive the Valley of Death, you’ll need access to all the cash flow you can get.
Now, you’re probably saying, “I’m very careful with my money. There’s no way my small business is wasting money!” Oh, really? Are you sure? Most cash-strapped entrepreneurs are confident they’re being smart with their money until closer analysis reveals numerous ways money is being thrown away on a daily basis.
The fact is that every entrepreneur makes mistakes when building a business. It’s a constant learning process. So, the point of this article isn’t to criticize your money management skills. The point is to uncover some areas where money might be slipping away without you realizing it. Many of these tips come from entrepreneurs just like you who have learned from their mistakes along the way.
With that in mind, here are 5 ways your small business might be wasting money.
- Decking out your office—Sure, it’d be nice to have a desk made of the finest mahogany and an office chair that makes it feel like you’re floating on a cloud, but in your early days, you don’t need to be spending a lot of money on your office. Function over style is what’s important here. Only spend on the things you absolutely need to run your business, like office supplies such as inkjet toner cartridges, pens, paper, etc. The nice furniture can wait.
- Office space—While we’re on the subject of office expenses, do you really need to be spending a lot of money on your office space? If you can get away with working at home, do that. If you absolutely need office space, choose wisely. Don’t overpay, overbuild, or overspend on business space that is more than what you really need. Consider these tips from Entrepreneur when choosing an office space.
- Poor marketing and advertising choices—Don’t think this is a knock on marketing and advertising…it’s not. Yes, you need to promote your business, but that doesn’t mean that all ad space is created equal. Don’t waste your money on ad space that’s not going to get the attention of your target audience. Do your research. Figure out where your target audience is, and focus on getting advertising in those publishing spaces. The same thing goes for all of your branding and marketing – logos, websites, SEO, social media, etc. While it’s important to build a strong, trustworthy brand, your first priority should be creating a quality product or service that’s actually worth promoting. Don’t blow all of your marketing dollars chasing the latest trends. Be frugal and focus your spending on things that will generate a return on your investment.
- Doing everything yourself—This might sound a little contradictory at first. Doesn’t doing everything yourself save you money since you aren’t paying someone else to do it? It depends. Experts recommend doing what you do best and hiring others to handle the rest. There are a couple of reasons for this approach. First, if you’re taking on tasks you aren’t qualified to handle, you’ll do a bad job and it’ll cost your business. Also, time is money. The more time you spend on tasks you don’t need to be personally doing, the more time and money you’re wasting.
- Making bad hires—Okay, now that you know that getting outside help can save you time and money, there’s something else to consider. Not all hires are the same. If you don’t hire the right person for the job, you’ll end up wasting a lot of time, and you could end up doing serious harm to your business. Do your best to thoroughly vet all candidates, but in the event that you still make a bad hire, know how to get rid of them early and decisively.
The fact is this list could go on almost forever. There are so many other areas where money gets wasted, from software to computers to company cars to HR. The point is that you need to pay more attention to your money. Track every dollar…every expense. When you’re committed to monitoring your finances closely at all times, you’ll identify areas where you’re overspending and you can take the steps necessary to save money and keep your business up and running.
About Author: Paul Williams is a business coach and mentor who helps entrepreneurs achieve their business goals. He regularly blogs about a number of small business topics.