Is your business seeping cash for no reason? Some expenses are like a dripping faucet: you know it’s there, but it seems insignificant, so you let it go on too long. Others are more like a broken pipe underground, well-hidden but causing massive damage. Here are some places to check for financial leaks so you can stop your biggest money-drainers.
Watch Your Staffing Costs
Staffing is a massive cost for most small businesses and a huge area of waste. Underperformers must be replaced quickly, because they prevent you from hiring excellent staff who could be moving your company forward. As your company grows and changes, your staffing needs will rapidly change. Instead of always adding staff as you grow, look for ways to streamline procedures, combine positions, or outsource functions.
Wasted Time: Your Own
You, the entrepreneur in charge, are a valuable commodity. It is your vision, energy, and unique skill set that drives the company forward and keeps the team unified and goal-focused. If you are worn down from manning the oars, no one is steering the ship. Your time should be focused on the things only you can do. Delegate or outsource the rest of your tasks.
Wasted Time: Your Staff
As you grow, redundancies occur — like recording the same information into multiple systems or storing documents both physically and digitally. Ask your front-line people where they feel their time is being wasted, and listen to their suggestions.
Stay On Top of Your Books
Keep as much of your invoicing and bookkeeping in-house as possible, so you always have up-to-date information. Using online accounting software from Sage will help you track time, bill customers, track expenses, and get paid.
Squash Outdated Expenses
Are you still running yellow pages ads? Sending paper newsletters instead of blogging? Faxing things that could be e-mailed? Printing things that could be handled electronically? Unless you have a good reason to keep incurring those costs, try to streamline and modernize.
Fire Your Worst Customers
It’s a common mistake in the early days of running a business to make sales that are not profitable. This might have happened either because you didn’t fully understand your expenses or because you needed to get those first customers in the door. If you have clients who are grandfathered in at unprofitable pricing, or customers who have crossed the unprofitability threshold by making increasing demands, don’t let those relationships drag on. Think of yourself as an advocate for those customers who are paying full-price. It’s not fair to them to give the same service to those who pay much less.
If you’re not managing morale, it’s slipping. As you grow, your corporate culture will change, and you can’t afford to lose your best people to neglect. Simple things like casual days, pizza parties, and making sure everyone feels heard will reduce turnover.
Taking control of these common cash leaks in your business will reduce your expenses and tighten up your budget. Ultimately, that means less stress for you and increased profitability for your business.
Photo credit: Jeremy Kunz / Flickr