4 Ways to Stop Losing Money in Your Business
Collaborative post
As a business owner, you’re faced with all kinds of expenses on a daily basis - from employee salaries to energy bills to the cost of IT support.
These costs are an integral part of your operations, but you need to keep an eye on them.
If you're not smart with your budget, your expenses could outweigh your profits, and you’ll end up losing money rapidly.
Small businesses generally have a tight budget, and therefore any cost must be weighed up against its benefits.
So many entrepreneurs waste vast amounts of money on inessential things or end up overspending due to poor bookkeeping and allocation of resources.
If you want your business to be profitable - and why wouldn’t you - follow these four tips to stop your business from losing money.
Get liability insurance
Few businesses ever expect to be hit with a court case, but when it happens it can be disastrous.
You could end up in court for several months, spending colossal amounts on legal fees.
Perhaps a client sues you for not fulfilling a contract, a customer slips and breaks a leg on your premises, or a disgruntled employee takes revenge.
Whatever the reasons, they are almost always avoidable.
The first thing you should do is take out liability insurance, which will protect you in such an eventuality.
If you’re in the US, check out various law firms like companies like the Rockwell Legal Group to help you minimize the risk of being sued.
Random note: my financial advisor had me take out liability insurance for me as a person a few years ago.
2. Track your overheads
The day-to-day costs like energy bills, rent, and travel expenses are essential for business and are therefore unavoidable.
However, there are several ways to minimize them. Be smarter with your energy usage with eco-friendly light bulbs and minimizing consumption of water and electricity.
Going paperless is also a great solution, and while you may not think it would make much difference, over time it will save you a heap of money.
Business travel costs can be reduced by holding meetings virtually, using an online communication platform, rather than face to face.
3. Stop equating busy-ness with productivity
We have been taught that being busy means being productive, which is why most workplaces are soo obsessed with employees coming into the office for a full 8 hours a day even if the work can be done in 4 hours.
It's also why most entrepreneurs pride themselves on full work schedules and being too busy for anything.
But what if productivity and profitability are not linked to busy-ness and time?
What if we can find a way to increase our productivity without sacrificing our quality of life and this translates into increased profitability?
What if increased productivity can be achieved by us changing the way we work - embracing flexible working hours, reducing stress levels, promoting mental health and self care?
4. Improve your bookkeeping
As a small business owner, you wear many hats, and one of them might be that of the accountant.
If you are managing your own books, there’s a good chance you might end up making mistakes.
Unless you're a qualified accountant, it’s always a good idea to outsource your finances to a professional.
This way you will avoid costly mistakes and potentially find additional opportunities for saving and making money.
I outsource my bookkeeping to an incredible accounting company but I also have a business budget and at the end of every month I compare my bank account and budget and I see how I am doing and where I am losing money.
I also look at my sales and revenue and look at what products and services are doing well because it gives me a good idea of where to focus my energy.
Where do you find yourself losing money in your business?
