5 things businesses shouldn’t waste money on
As we ring in the New Year and all is merry and bright, we also often implement new goals and make resolutions for the coming year. Goal setting is a valuable exercise for personal and business success. However, as useful as it is to make these goals, some old habits die hard.
This New Year, spend some time on whipping your business finances into shape. Both new and established businesses are guilty of wasting money at one point or another. Even if it’s on little things, these costs can accumulate over time, resulting in a hefty loss that could have easily been avoided.
Budgeting is important to your business and can push a business over the edge from profit to loss. So it is important to keep careful tabs on expenses and revenue. Here are the five most common things businesses waste money on.
A common misconception is that the more money spent on marketing, the more leads, sales and profit result. This is why marketing can end up being risky. Marketing campaigns are basically based on the quality of the product your company is selling, the target audience and the budget available. What might work for one business may not work for another. Choosing the most expensive option right off the bat without evaluating your options is a very easy way to waste money. Determine what method will be most effective for your business and then figure out how much to invest in a campaign instead.
- Over/under staffing
Businesses can get complicated when too many roles and managers are in place. It is helpful to think about what positions are necessary and which aren’t. It may be possible to merge a few jobs into one role, which would cut costs and boost efficiency.On the other hand, if your business is young and growing, you may find yourself being short staffed. Employees may wear too many hats and take on too many tasks. It is important to evaluate your business processes and find a balance that ensures everything is running smoothly.
- Top of the line equipment and space
Many newer companies jump the gun and invest in luxury items before they see any revenue. The thought process behind this tends to be that they are investing towards future and growth. What most commonly occurs is that business owners make these big-ticket purchases, the revenue doesn’t roll in and they soon find themselves struggling.When starting a new business, entrepreneurs can get excited and make purchases based on emotions rather than practicality. Business owners should always ensure that they are being realistic when purchasing. Some businesses also justify buying new equipment at the end of the year to avoid taxes. Business owners, especially small businesses owners, should only be investing in areas that provide definite ROI. Successful businesses tend to progress steadily by upgrading equipment and office space as they grow.
- Budgeting once a year
In today’s fast paced economy, the traditional standard of spending weeks on end creating an annual budget just doesn’t cut it. Annual budgets can quickly become out of date, even one month after they are drafted.A budgeting system built around a rolling forecast is a better option. This gives firms the opportunity to adjust the budget as needed and not rely solely on data derived from months before.
- Inadequate budgeting software
Budgeting software can provide tangible benefits to businesses struggling to keep up with managing transactions. Instead of spending time sorting through mountains of data by hand, energy can be redirected toward analytics and decision-making.Each business has very different needs, however. Budgeting software can sometimes be too complex for the business processes it is managing. When that is the case, specialized training and knowledge are needed to maintain and effectively run the software. Those that aren’t trained in this program can struggle and may end up having to rely on others to complete tasks. This creates inefficient workflows within a business and not only results in wasted time, but wasted costs as well.
As you venture to grow your business, make sure you track expenses, too. A New Year’s business resolution of making sure expenses provide a return on investment will help in making 2016 a successful year for your business.— Daphne Lefran@daphnelefran, writing on behalf of budgeting software specialists True Sky.
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