You may be surprised to learn that most small businesses fail. The statistics show that around 1 in 5 fail in the first year, and by the end of year 3, that number has reduced to 1 in 2. There are a number of reasons why a business will fail, but ultimately, a business fails when they run out of cash.
While every business owner understands this, preventing it is a whole different ball game. The obvious solution is to look at ways to increase sales, implement more efficient marketing techniques, or efficiently scale your team. But all of these things are likely to increase costs, which in turn puts more strain on the business. Instead of simply looking to make more money, consider ways to prevent money from leaving the business.
Your business is probably already losing money without you even noticing. The four areas below are common hidden costs that go unnoticed. Is your business guilty of losing money due to these four reasons?
Inefficient Roles
Start by evaluating the role of each employee within your business. For most small business owners, their team is small, so it should be quick to run through each individual role, and your own role in the business should be included too.
The truth is that many business owners feel like they need to fill a certain role, but the reality is that their business could function just as well without certain positions being filled. That doesn’t mean you should start firing individuals; it simply means their time could be better spent elsewhere.
Take a receptionist, for example. If your business phone isn’t ringing off the hook every two minutes, you might be paying someone to wait for the phone to ring. Instead of this inefficient use of time, why not use a phone answering service for small businesses that charges you per phone call, meaning you only pay for the time you use? Leading providers include companies like Pocket Receptionist and Posh.com.
Time Management
Since the pandemic forced us all to work virtually, it appears we’ve fallen in love with meetings. Even the smallest of tasks now require a meeting before work can start, but in most cases, getting started sooner is a more efficient use of time.
You may be wondering how stopping meetings can save you money. But as the old saying goes, time = money. If your team are spending too much time in unnecessary meetings, it means less work is being done, fewer products are being sold and less service is being provided to your paying customers. So think twice before scheduling that meeting to discuss how to protect your small business, and just get started instead.
Unnecessary/Unused Subscriptions
Most money-saving experts will tell you to analyse your subscriptions. From gym memberships to your Netflix subscription, many of us are spending money on things that either aren’t necessary or aren’t being used. Your small business could be in the exact same boat.
Next time your team ask for a certain service or an upgraded subscription, ask yourself how much money this new tool would make the business. If the answer is less than the cost, it’s an efficient use of funds. And don’t forget to review your outgoings to catch any subscriptions that are simply not being used. These are slowly bleeding money from your company and offering zero benefit.
Final Thoughts
It’s impossible to list every potential area to save money for a small business. But hopefully the ones above give you food for thought. If any of these set the alarm bells ringing, it’s definitely worth doing a full review of every cent that is leaving your company. You may be surprised at how much money you can save!