Nobody likes to waste money, even if they have more than they could ever need. For businesses, every dollar wasted is a dollar that could be put toward reaching additional customers or improving your products. One of the biggest problems is that too many companies put their money toward unnecessary expenses, often because they don’t take the time to reevaluate the way they do things. Over time, if you continue to do things merely because you’ve always done them that way, you may be wasting your money.
Fortunately, businesses seem to waste money in very similar ways. By reviewing these areas of your operation, you may help cut your budget and save money.
1. Excess Employees
In an era of virtual assistants and independent contractors, companies no longer have to hire full-time salaried staff to handle day-to-day tasks. Instead they can outsource duties to freelancers who work on an hourly or per-project basis. Businesses should consistently monitor their salaried workers to ensure the positions actually require a 40-hour-per-week dedicated employee. Only add new positions when you’re sure that the workload merits it. As difficult as it may be, recognize when it’s time to let an employee go rather than continue to pay someone to sit idle much of the time.
Just as hiring freelancers can help save a growing business money, it can also lead to unnecessary excess spending. Salaried employees can often handle a multitude of tasks at a lower hourly wage than a freelancer or contractor. You’ll also have the added benefit of working with someone who knows your business and can grow with you. Familiarize yourself with the pros and cons of outsourcing and hiring and eventually you’ll be able to easily identify when to bring someone on full-time.
2. Business Travel
Some professionals make the mistake of assuming they need to hop a plane every month or two to make lasting connections. They register for every conference, buy booths at trade shows, and constantly find opportunities to network outside of their immediate region. While travel can definitely be well worth it, it’s important to make sure you’re getting an ROI for every trip you book. Plane tickets, group dinners and hotel rooms aren’t cheap, not to mention the days you and your employees won’t be in the office grinding away.
“The key to saving money for your business is to know exactly where you’re spending it each month.”
3. Untargeted Marketing Campaigns
With data analytics a large part of everything businesses do, any company that doesn’t measure its marketing efforts can quickly be left behind. Make sure before you post on social media or purchase paid advertising that you’re monitoring how your efforts are paying off. The results you get from today’s email blast can color the decisions you make on future campaigns, even for many years to come, so it can be well worth it. Eventually, every dollar you spend can be another dollar that brings more money into your business.
4. New Technology
Companies often feel as though they need to invest in the latest technology across the board, whether it’s the software they use to manage operations or the devices that help them use that software. A 2016 study by Genpact Research Institute found that out of an estimated $593 billion spent yearly on digital technologies, up to $394 billion is spent on efforts that deliver insufficient ROI. In addition to overspending on devices and software, you also may be paying for tech support personnel and server administrators who spend most of their time waiting for something to break. Instead, you can sign up for on-demand support or outsource your infrastructure to the cloud to help save money.
How are your negotiating skills? If you aren’t at the top of your game, you may be spending more than you need to on manufacturing, office space leases, supplies, equipment and everything else you use to power your business. Learn to negotiate with your vendors to help save money that you can put toward growing your business. Chances are, you spend plenty of time negotiating with clients to get top dollar for your products or services, so you may as well use those skills on the expenditure column of your budget.
6. Failure to Track Expenses
Wining and dining clients is an important part of growing a business, but be careful with those fancy restaurants. You may be sending more money out the door than you realize if you aren’t closely monitoring things. With so many expense tracking apps, it can be easy to keep up with every expenditure. You can snap copies of your receipts and have them automatically import into your accounting app, saving time and eliminating the need to keep up with pesky pieces of paper. Best of all, at various intervals, you can pull reports that show exactly where your money is going.
The key to saving money for your business is to know exactly where you’re spending it each month. When you’re aware of the ways you may be wasting money, you can more easily identify overspending and make changes that can help save your bottom line. The end result may be a stronger budget that you can use to move your business to the next level, rather than merely surviving day to day.
Source: Open Forum by American Express