Cash flow is hugely important for small businesses. Small business owners need to carefully consider each investment that they make and the amount of money that they spend because spending too much without a good return on investment could lead to future problems.
With any small business, some costs are going to be unavoidable. Business energy, insurance, website hosting costs, and marketing costs, for example, are inevitable. But, could you be spending more than you need to on these necessary expenses? Here are some of the ways that your small business could be throwing away money without even realising it.
Paying too much for energy
Energy prices tend to fluctuate all the time. As you may have already experienced with the energy in your home, you could find the best deal at a certain time, only for prices to change a few months later, and the deal you got suddenly doesn’t seem that great anymore. On the other hand, you could secure a deal that means you’re paying less when prices rise in the future. And it’s the same for your business. Since energy costs are subject to constant change, the only way to make sure that you’re not paying more than you need to shop around regularly. Use a comparison tool to see if you could be getting a better deal. Many businesses switch providers to save money; switching is usually quick and easy.
Hiring unnecessary staff
Most small business owners reach a point where they struggle to get everything done on their own. But before you go out and hire staff, consider whether or not you will be able to get the same job done with freelancers or by outsourcing to another company instead. Freelancers are available to help with pretty much anything that your business might need, from virtual assistance to web design, marketing, social media management, blogging and customer services. Instead of paying them a salary, you’ll pay them per completed job, which can often work out much cheaper for your company. In addition, outsourcing to other companies for tasks such as HR or call centre operations can often work out much cheaper than hiring a team of in-house staff, for example.
Overspending on marketing
Marketing is essential for getting your business out there and raising awareness of what you do, but spending too much on marketing can lead to problems for many small businesses. This often happens when a company jumps too quickly into a marketing campaign without first testing it. The best thing to do with any new marketing campaign is to test it out with a small amount of money first, which will help you determine whether or not spending more is going to be worth it.
If you’re printing a lot of things for your business, it might be worth asking yourself if any of it can be done electronically instead. These days, emails reach people much faster than letters and you can utilize social media to advertise instead of pamphlets, for example. Paying for paper over time can quickly add up, and then there’s the price of ink and printer maintenance to think about. Cutting down on paper use will not only save you money – it’s also much better for the environment.
Not setting clear goals and KPIs
Many small businesses don’t have goals and KPIs for each employee, which can lead to unnecessary overspending. Setting goals and using KPIs to track processes allows business owners to determine which strategies are working well and worth investing more in, and which are not.
Many small businesses that fail do so due to cash flow problems. Is your business unnecessarily spending money in any of these areas?