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Any business needs to pay close attention to the finances, but this can be tricky to get right. One of the most common problems that you come across here is not quite knowing where the money is going, and this is an issue that can be hard to fix. It is sometimes referred to as shrinkage, although more to the unknown loss of stock and products. However, whichever way the money disappears, it’s essential to try and get to the bottom of it so you can work out how to fix it.
Being in business is far from a typical job with set hours. Issues arise at all hours, no matter the type of entity. Preparation is our best investment. Accordingly, it is wise to listen carefully to the stories others share about their difficulties and how they overcame them. Equally helpful is to realize the obstacles others face and why they finally closed their enterprise. When we are willing, we can learn much from all lessons, including the good and the bad.
In this post, we will make this a little easier for you by looking at some of the most common sources of this kind of unknown loss. Be sure to check out each of the following in your own company to ensure you are on top of potential issues and know precisely how to fix them should they occur.
5 Areas For Review To Save Time and Money
1. Product Defects
The products you create and sell are hugely important, not just because the customer has to enjoy them and make use of them, but because it will cost you dearly if you need to improve them when they break constantly. In fact, according to some sources, product defects are the second most common cause of financial loss for a business. As such, you should aim to build the best product you can the first time around, every time. That will ensure that you minimize the number of times you have to recall a product and fix something about it. As long as you take care with the prototypes, it is relatively easy to avoid product defects in the first place.
2. Unnecessary Office Space
It is too easy to rent out far too much office space when you start in business, thinking that you need it. You might be expecting faster growth than what typically occurs, or you might not need as many people working for you as you thought. In any case, it’s essential to make sure that you are not claiming too much office space, as this is an unnecessary expense that you can probably eliminate. If you do find that you have accidentally bought too much office space, rent out some of it or sell it and use that money to recuperate your losses. If you need more office space in the future, you can always acquire more.
3. Poor Payroll Practices
Your payroll is another area that you need to pay close attention to, as it is all too easy to find that you are accidentally paying out money that you shouldn’t be paying out. It can happen in a variety of ways. It might be that there are more than usual unemployment claims that you have not correctly claimed back. Or it might be that there is accidental overtime for which you are paying and unaware. It can happen all too easily. But in any case, you need to make sure that you are aware of the payroll practices that are going on in your business and do all you can to keep them as they should be.
4. Wasted Time
The old adage about time equaling money is more accurate than many people realize. The more wasted time there is in your business, the more wasted money there is too. Anything you can do to reclaim time and not waste it will ensure that you can successfully stop your business from losing its cash. It’s wise to include measures such as keeping productivity high. One starting point is to ensure that you are automating those processes you can easily automate. Over time, the effort will make a big difference to how much money you save in your business. It is something worthy of serious consideration.
“The less time you waste, the better off you are financially in your company."
5. Overzealous Marketing
There is no doubt that businesses need quality marketing for them to succeed. But you also need to ensure that you are doing all you can to avoid over-the-top marketing, as this can often do more harm than good. Businesses are often so used to simply throwing money at their marketing budget that they forget this is not the most prudent option. Instead, consider reining it in a little and going for a more subtle marketing approach. You might find that this will make an enormous difference to how much money you spend.
Sales Tips: Where Is Your Business’ Money Really Going?
- Each month review expenditures to determine where is your business’ money really going?
- When a service appears to be expensive, research other service providers for comparison.
- Admit whether ego interferes with realistic financial decisions.
- Hire capable talent that can eliminate unnecessary redo’s.
- Consider whether paying a higher salary will be less expensive than fixing multiple errors.
- Entertain the idea of a focus group to understand what else clients seek in a provider.
- Research how new technology may make your processes more efficient and cost-effective.
- Examine potential delays in client delivery due to delays on the back-end.
- Always check in with clients regarding their satisfaction and capture the testimonials.
- Celebrate Success!