Your finances are undoubtedly going to be at the heart of your business. You might have a specific mission statement; you might have a close relationship with your clients and customers. But at the end of the day, all of those things require money to achieve. Without money, you don’t really have a business, at best you have a very expensive hobby.
The problem is that far too many small businesses waste huge amounts of money on things that could easily be avoided simply because they aren’t paying close enough attention to the little details.
Think of your business as a ship. If your ship springs a leak, you can’t do anything until you’ve plugged it up. So here are three ways that your business could well be leaking money:
Marketing.
This is a problem that most small businesses end up having. All too often, they assume that if they spend more money, their marketing will be more effective. This couldn’t be further from the truth! In fact, if your marketing isn’t being targeted effectively then it won’t matter how much money you throw at it, it’s just going to end up as a waste of energy and resources. The most effective thing that you can do is to figure out who it is that you actually want to market your product to. Who is your target customer? Until you know that, you’ll never be able to create a well thought out marketing strategy. Instead, you’ll just end up throwing money away on marketing that doesn’t bring in nearly as many customers as it would take to justify the cost.
Equipment repairs.
The reason this ends up becoming a problem is that far too many businesses end up assuming that because a piece of eqiupment is working then, they don’t need to think about it. The problem with that is that if, and when, a piece of equipment breaks, it can end up costing a lot to repair or replace, as well as damaging productivity for the business as a whole. Instead, you should make sure that you test and tag your equipment as often as possible. It might seem like that’s being overly cautious but it takes far less time and money to test a piece of equipment than to fix it when it breaks. Plus, once it’s tagged then you can rest easy knowing that it’s not going to break anytime soon.
Growing too fast.
Growth is obviously a very important part of any business. The problem is that a lot of business consider it to be so important that they forget to grow their business in a stable, sustainable way. Instead, they end up doing things like taking out loans that they might not be able to pay back, or taking on investors who will have overly high expectations. Things like this can end up costing your business far more money than they can make. The important thing is to let your business grow at its own pace, that way you don’t end up with a business that can’t acutally support it’s own costs.
