Odds are, you’re a business owner looking for ways to save money and increase profit; those same odds suggest that you could be making some of these small business, money-wasting mistakes. Save time and money by avoiding these financial traps:
- Outsourcing too many tasks. More often than not, startups find that outsourcing tasks makes things easier and sometimes even cheaper, but the real value and savings may lie in learning the skills yourself. Vertical integration is a crucial aspect of running a business, although there are times where outsourcing can be beneficial in the long run.
- Using better technology than needed. Depending on what business you’re starting, software can come at an expensive price, especially when trying to buy the entire platform at a one-time rate. Remember, technology changes every day, so when you’re left without the capital to reinvest in the most recent software, perhaps you should think about paying monthly fees for software from the cloud.
- Marketing incorrectly. A large part of marketing incorrectly comes from businesses that dump money into pay-per- click advertising with no expertise. Without tracking ROI (return on investment) and knowing the best ways to do this, you might be better off hiring a professional. As stated earlier, there are certain times for outsourcing, and this is one of them.
- Poor tracking of expenses. Every dollar adds up, so when it comes to expenses, keep track of everything. It’s better to be detailed than to have an over-expenditure. It’s also important to make sure that you are getting a return on investments. Every dollar spent should have a reason or an actual ROI. If you don’t have either of those when deciding on where to spend your money, don’t do it!
- Bad hires. To replace a management position, it can cost up to 150 percent of their salary. Be careful when hiring and make sure that the employee is not only necessary, but also passionate about the business.
- Wasting time. You’ve heard it before- Time is money! Time is the one thing you will never get back so make sure to use it wisely. This goes not only for you, but for your employees as well. Figure out what’s worth spending time on and how much time to spend on each task.
- Paper. At this point in time, almost everything is digital. There’s no reason for your business to be spending $ 25.00 on every crate of paper, as well as, filing cabinets to go along with it. Although that doesn’t seem like a lot, it adds up, so only use paper when it’s absolutely necessary.
- Not following up. After putting forth marketing efforts and capital to capture leads, it’s essential to follow up with customers to maintain those leads. Whether it’s on a monthly or weekly basis, track where you’re at with your customers and use customer relationship management software to do so.
- Website design. Having an updated website is an important feature, but you will pay more than you can afford for a truly unique website. Instead, try starting with choosing a simple theme through sites like WordPress, and focus your efforts on creating updated content, tracking ROI, and using CRM software.
- Loans. Mark Cuban, serial entrepreneur, said that “only morons start a business on a loan”. In a sense, this is true, but mainly for bank loans. With a bank loan, you must have a personal guarantee and collateral, two things that you’d rather not go without. Failing to understand the amount of work that goes into starting a business could thus, result in financial collapse for not only you, but your family as well. Instead, try checking out these methods of alternative financing for small businesses.
Wasting money is easy to do, but luckily, it can be an easy fix. Get your small business started on the right path and don’t spend money you don’t have to.
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