3 Common Areas Where Small Businesses Lose Money
While every business will have a different operational style, there are departments that almost every business will have in some form or another, such as accounting, marketing, and IT. As a a business grows, within these departments there should be a vigilant attitude in place in order to prevent the waste of valuable business funds, since there are a few common ways that business owners can lose money through a loose management style in these areas.
IT programs that are not effective for their staff. The state of the art programs that you want to put in place in order to optimize your processes are not going to help if your staff has no training in how to use them. While you may be able to afford a new program at face value, business owners should account for the possibility that they will also need to finance additional training for their team in order to make their IT upgrades effective. There are many technologies that are marketed to businesses that work on a subscription basis. If you are paying for subscriptions to services, then you should be sure that you are getting your money’s worth. If you or your team members hardly ever use a technology, then you should consider switching to a free version or replacing the functionality with another program.
Lazy accounting practices. If you are able to manage the accounting side of your business yourself, then more power to you. That being said, as a business grows and business owners have their attention increasingly divided, they should be honest with themselves if they are no longer able to fully manage the number side of the business themselves. Not only can bad accounting get you in trouble when budgeting and allocating financing to your projects, but it can also cause major issues the next time that tax season rolls around, making solid accounting practices a priority for every business.
Marketing that isn’t based on market research. When small business owners create marketing plans, they should be sure that they base their budgeting around an expected return that is realistic and not purely conjecture. Ordering marketing tools and paying for PPC, banner ads and digital marketing, as well as direct marketing such as mailer campaigns can quickly add up to be multiple thousands of dollars, which can be a tough loss for small businesses to bear in the event that they fail to create ROI. Instead of taking shots in the dark, business owners should create at least some basis for getting a clearer picture of the potential result of their campaigns before they commit to investing in them.
Photo Credit to Tax Credits on Flickr