Do you know what's a great idea? Starting your own business. You can get creative and work in the comfort of your own home, and if things go well with this new endeavor, there is always an opportunity for growth!
But some things can hold us back from doing just that or keep us stuck in a financial rut.
Not every business owner is as savvy when it comes to financial matters. As such, they can waste money in many ways, which may not be immediately apparent at first glance but will only cost more in the long run!
You may not have realized it, but plenty of things in your small business could be wasting money. Here's how you can stop the bleeding and improve profitability – without spending any more!
1. Stop wasting money on marketing that doesn't work
Some marketing campaigns are sure-fire winners, while others may flop miserably. Unfortunately, many small business owners keep throwing good money into the same failed marketing campaigns hoping to get different results. Instead of continuing to do what isn't working (and wasting your hard-earned cash), look for new ways to market your business.
Create a new marketing plan while focusing on your target market and how they prefer to receive information. Doing this will ensure your promotional activities are effective and you don't waste money. Otherwise, you're just burning money, and Facebook™ doesn't mind taking it.
2. Stop wasting money on opportunities and projects that aren't profitable
It's hard to turn down new business opportunities when they seem like good ideas, but sometimes we need to wait before jumping in headfirst with both feet. I'm hella guilty of this, too. So trust me, shiny object syndrome is REAL. But the truth is that you probably don't need any more opportunities in your business right now, and taking on one that isn't profitable yet just means more work for no money in return.
Opportunity cost is where you give up the potential gain from your best choice to pursue a new opportunity. As such, we need to consider whether or not we can afford to take on this new project and whether it will be profitable for us before we dive right in!
That doesn't mean all offers are bad, but you should only accept the ones that make the most sense for your business, considering all the costs involved.
3. Stop wasting money on technology that you don't need
Not every small business owner has the latest gadgets, nor do they require them. The key to successful technology purchase decisions isn't about how cool a product may be or what features it offers; it's about clearly defining the benefits for your company, identifying any associated costs, and weighing those against the potential benefits before making a purchase.
Here's a great example:
I often get asked which type of computer someone should buy. They'll go on about how someone who probably doesn't know a damn thing about their business spews out Apple. Why? Because “it's the best one.”
As an Apple fangirl, I have to say that the best computer is the one you can afford for the tasks you are trying to do. Is an Apple laptop/desktop better than a less expensive laptop? Not necessarily. Does the more expensive computer make those tasks easier and faster to complete? Maybe – maybe not. You need to determine if the benefits outweigh the costs before making a purchase like this.
So rather than spending money on something unnecessary – because there's no benefit for your company – take a look at what you currently use and use it as efficiently as possible. The same goes for all of the technology you're buying!
Ask yourself: does this new product offer real value instead of just bells and whistles I don't need?
4. Stop wasting money on unnecessary or inefficient processes.
Many small business owners still don't know how to use basic tools like email marketing, CRM software, and sales automation apps because they've always done things their way, which was probably more costly than needed!
One of my favorite quotes relates to this: “If you do what you've always done, you'll get what you've always gotten.”
So instead of continuing down your current path and doing things the way you've always done, take a few minutes to review your processes and figure out where some inefficiencies or redundancies can be eliminated. Then go ahead and improve them.
For example, if you're constantly writing new emails to customers with similar questions – because your FAQs aren't working properly – then set up an automated email sequence using an email marketing tool like ActiveCampaign or MailerLite so that each customer gets relevant information within hours of signing up for your subscription program instead of days or weeks later after you have personally responded to their individual question! See how this process saves both time AND money?
5. Stop wasting money by cutting corners with the wrong tools or equipment
This is a pretty simple one: if you don't have what you need to do your job, then you're going to waste time and money trying to get it done yourself because there's always an associated cost – whether it's travel expenses, product costs, operational costs, etc.
Depending on what you do for a living, it may be tempting to cut corners by using cheap inferior equipment or services that don’t last long or work well. Unfortunately, upgrading your gear too often is expensive and can cause problems within your business if you're not careful. When choosing new tools, equipment, or service, your best bet is to make a smart investment that will last for years. You're wasting money if you constantly have to replace your tools and equipment!
I get it – we operate on a limited budget, and sales aren't always consistent. But unless your business makes up for these initial costs with increased sales down the line, this isn't a good decision from either a financial or operational perspective.
So next time you think about using a different product or service than what you currently use because it's cheaper, don't do it! Instead, put the money towards getting the proper tool – software like Quickbooks for bookkeeping or an online course on how to get more out of your CRM.
Bottom line: you need to do what makes sense, not just what is affordable! So ALWAYS buy based on long-term goals that benefit your company – not just short-term savings!
6. Stop wasting money on duplicate products/services.
You don't need Quickbooks if you already have Xero. If you have Dubsado or Honeybook, you probably don't need Acuity. And if you are already using ActiveCampaign for email marketing, sales automation, AND SaaS billing, stop using three other tools to do the same!
While this one is pretty simple, many small business owners still don't do it. So the next time you are about to sign up for another service or buy another product because it's similar to what you already have – stop yourself and reassess why you're getting it.
Because this is usually where waste comes in because either
- You didn't properly research all of your options before making a decision OR
- The solution doesn't align with your customers' needs OR
- There was more value initially, but now that you've invested money into it, the ROI isn't there anymore.
So instead of continuing to spend money on duplicate products and services that you don't need, take a few minutes to evaluate why you bought the first time and make sure whatever you're thinking about getting next has:
- A clear purpose: what specific problem will it solve for your business?
- A strong ROI: how much will it help grow your company AND generate leads? Or save money/time in the long run?
- A good fit for all customers: do you have at least one customer profile that would benefit from using this product (and no other)? If not, then maybe wait until you do!
Also, remember that there are tons of trends, so if something seems popular and you don't know what it is, ask around and do some research to explain why this could be a good investment. If you can't find solid answers to your questions, it's best to hold off on the purchase. If it isn't a hell yes, it's a hell no!
7. Stop wasting money by not keeping track of expenses
Many entrepreneurs fail to reconcile their accounts on an ongoing basis – this is a HUGE mistake if you want to know where your money goes. Yup, I'm talking about reconciling bank accounts every month to get an idea of how much profit you're making (and losing) along the way.
This way, you'll be able to identify whether or not your current business model is profitable enough before trying to scale it too quickly!
Now, this one is very simple but surprisingly common. I've never met a business owner who enjoys doing their bookkeeping and accounting! And that's fine – it isn't your favorite thing to do for sure.
But if you're not tracking how much you spend and how much money comes in each month, then there is no way to tell whether or not the numbers are truly adding up! So even though it might be time-consuming at first, once you get into a system, it becomes really easy- just like with most things.
Once all your expenses are logged and categorized, it's just a matter of clicking a few buttons and pulling reports to see how much you spend in specific areas. These reports then allow you to take the necessary steps to cut your losses and improve your ROI!
So instead of just guessing or making assumptions about what is working and what isn't, start tracking expenses and profits; you know exactly where to allocate resources. Otherwise, don't expect anything to change because chances are things won't!
Conclusion
As a small business owner, you know that there is no shortage of ways to spend money. And while it may seem impossible to find the time or the energy necessary to address every problem in your company, I have compiled 7 more common mistakes that can be eliminated from your budget with just a little bit of work and thoughtfulness today.
How can you save money in your small business today?
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