When you’re running a small business, it’s pretty likely that your finances will be at the front of your mind a lot of the time. After all, it doesn’t matter what your product is or how well you connect with your customers, without money your business might as well stop altogether. It’s a sad fact of life, but money really does make the business world go round. Of course, this mostly applies to money that’s coming in. Income and profit are usually the most important things to a business owner. There’s nothing inherently wrong with that of course, but it does become a problem when they start neglecting the other financial element of their business: their outgoings. If you’re not paying close enough attention to your outgoings, then you could end up wasting a lot more money than you realize. In fact, it’s likely that a lot of small business are actually wasting far more money than they might think. With that in mind, here are a few ways that your business may well be throwing money away.
Growing too fast
One of the biggest problems that a lot of small businesses find themselves running into is that they start to think that growth is the most important thing. They become so obsessed with the growth of their business that they push it past what it’s actually ready for or capable of. Taking on larger clients or suppliers might seem like a fantastic opportunity, but it can often lead to lower profit margins with much higher overheads. Growing your business will increase your labor costs which could lead you to have to borrow money in order to cover it. Not only does this mean that the growth of your business can end up actually costing you money, but at times the interest on the debt that something like this can create will be so great that it causes the company to collapse entirely.
Ignoring your bookkeeping
Let’s be honest, bookkeeping and accounting are not the most exciting or interesting parts of running a business. There are plenty of things that can drive someone to set up their own business, whether it’s an ethical concern, seeing a gap in the market, or any of the other possible reasons. But one thing that you can be sure of is that very few people start their own business because of how much they love wading through invoices and receipts. The reason for this is actually pretty simple and obvious. Accounting isn’t particularly exciting, and it can be rather complicated. Fortunately, modern technology has come to the rescue! There are now dozens of different pieces of accounting software that make handling your finances far quicker and easier. They might not make them more exciting, but at least they won’t take up as much of your time. Of course, if you still find yourself doing everything you can to ignore your books then it’s probably a good idea simply to hire an accountant. The cost of doing this will very likely be balanced out by the fact that your business will finally have someone who is paying close attention to the balance of your income and outgoings, and advising you accordingly.
Far too many businesses seem to think that the key to great marketing is to have as much of it as possible. After all, if you’re marketing your company as far and wide as possible, it’s going to reach more customers, right? Well, no. The most effective thing that you can do is actually to focus your marketing more carefully into places where you can be sure that it’s going to be effective. If you’re just throwing marketing out there at random, then it’s not going to reach the right customers and will just end up wasting both time and money. The best thing that you can do is to make sure that you’re conducting as much thorough market research as you can before you start marketing your business. This way you know exactly who your target demographic is and can tailor your marketing specifically to them. You should also carefully monitor the effectiveness of any given piece of marketing. If you’ve tried a particular strategy but then found that it doesn’t actually work as well as you thought it would, then you should throw it out and stick to the things that you can be sure will work.