It’s easy to get things rolling and running on autopilot, as you focus on growing your enterprise. No one becomes a successful millionaire overnight anyway, right? The last time you looked at your business financials, were you shocked to see you weren’t exactly where you thought you would be? Or planned to be at this point in the game?
Take a few deep breaths, and dig deep. It’s time to closely examine what you’re spending, where you’re spending it, and why. You may uncover some rather sneaky reasons why you’re purging cash faster than you realized – but it’s never too late to cut back your business expenses and reinvest the savings into your business.
You’re Paying for Things You Don’t Need – or Things You Can Get for Free
When you’re a small company with just a handful of employees, there’s no need to pay for an accounting service. Using a free accounting program can help you track income and expenses, and even help you handle payroll. When your business grows to the point where you can no longer handle it on your own, then you should have the capital to pay an accountant.
Nearly every service out there has a free version, or equivalent – from social media management, to task automation, to customer relationship management, and beyond. Of course it may not be as feature rich, and it may not be as “fun” to use. You’ll have to weigh the expense against the usability before deciding which investments to keep and which services to downgrade. Not sure if there’s a free option for a service you use? Take a look at this list of business tools for small businesses to help you get started.
Many of these services also have scalable plans, allowing you to pay more as you grow. When you outgrow one plan, you can upgrade to the next one that fits your needs, without having to pay for more than you need. Keep in mind, you can save a considerable amount over the course of a year by opting for annual billing, rather than monthly.
Your Credit Sucks
Until your business is big enough to warrant its own credit profile, you’ll be getting all credit based on your personal score. Even then, some lenders may still look at both your business and personal credit scores. And bad credit comes with a big price tag. If you manage to get a loan in the first place, you’ll often get a higher interest rate, which means the money you borrow costs you more – even if you pay the loan off faster than the terms require. It can also make it harder to secure a business credit card, which can be helpful when addressing cash flow issues.
You’re Not Getting the Best Deal on Utilities
At the least, your business needs power, the internet, and some kind of phone service, whether it’s a landline or a cell phone. If you’re not careful to watch those bills – and many companies make them confusing on purpose, it seems – you could be paying all kinds of bloated and unnecessary fees.
Your power bill may be one of the most expensive you have to pay – depending on the size of your office and the nature of your work. If you’re running a small office, you don’t really have to worry about much, but if you’re running a massive manufacturing plan, then your power bill will have a bigger impact. Check your state laws – there are many states where power used to manufacture goods cannot be charged sales tax, though sales tax is allowed on the power used to heat and cool your space.
When it comes to the internet, plans can vary greatly, and you may find the pricing for various speed points vary just as widely. But, chances are, the differences in service are so minute you wouldn’t even notice. Who are you with right now? Are you sure they’re your only option in your area? Check your coverage on either BroadbandNow or Find Broadband to make sure. Both of these free tools allow you to find a full list of providers in your area, along with speeds, and contact information. Shop around, and see if you can get a better deal without sacrificing quality.
Check to make sure your phone company isn’t billing for voicemail service if your in-house phone system already has voicemail. Or, check to see if you can get a better deal on a virtual PBX. Pay close attention to the corporate cell phone bill, watching for data overages and the like, since group plans are often filled with overages and errors that are hard to catch. And while phone insurance sounds like a good idea – think about how those costs add up. If you’re paying $10/month to ensure smartphones for 25 employees, that’s $3,000 a year. How many phones were lost or broken within the last year? Surely not $3,000 worth!
You’re Working Without a Strategy
You may know a couple of awesome marketing tricks, and they may have worked a time or two, but the market is constantly changing. If you don’t have a clear marketing strategy in place, you may find yourself throwing money at a number of tactics that may or may not bring the return on investment you need to sustain reasonable marketing.
Each time you do the same thing over and over, you’re hitting the same people over and over, and the strategy will go stale. And when you’re doing well, you can bet the competition will step into the game and go after your market share.
Marketing itself is constantly changing, as new social platforms and tactics emerge – remember when Snapchat was just a platform for Millennials? Now, it’s becoming a powerful marketing tool. What did businesses do before the live broadcasting craze?
You’ve Hired Employees When You Could Get by with Contractors
Employees are great – but they’re also expensive. They are much more than their hourly wage or salary – even if you don’t offer a traditional benefits package. In September 2016, employer costs for employee compensation averaged $34.15 an hour. There are costs such as worker’s compensation and insurance to consider, too.
Contractors, on the other hand, aren’t legal employees of your business. As such, they remain more in control of their schedule but are also responsible for their own workspace and equipment. This means you’re only responsible for paying the wage agreed upon when a contract is signed. It’s often a more cost-effective way to get work done for your business, and since the gig economy is growing, there is no shortage of qualified freelancers to choose from, all across the globe.
You can get rich with high-profit margins, but you can’t stay that way. You will always need personal finance skills if you want to remain profitable. You could be earning a six-figure salary, but if you’re not smart with it – blowing it on whatever you want and making risky investments, you’ll be broke before you blink. That also applies to your business, so you must pay attention, make intelligent investments, be frugal, and most importantly, responsible.
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