Running a business isn’t easy. It’s a full-time job that takes plenty of hard work. However, it also takes smart business sense. If you lack it, then you may end up losing all your company’s profits to bad investments and poor decisions. You need to know how to avoid these pitfalls. With this in mind, below are five of the biggest money sinks in business.
Outsourcing When It’s Unnecessary
Outsourcing should only be implemented when it actually produces cost savings for an organization. Many times, however, companies outsource tasks like payroll, for example, that could easily be accomplished in-house without the extra fees for payroll services from an outside firm. Always perform a cost-benefit analysis when deciding whether or not outsourcing a business task would be advantageous.
Not Implementing Energy Efficiency
Electricity is a huge overhead expense for any company. It’s only wise to look for ways to bring that expense down. One strategy often ignored by many companies is implementing energy efficient appliances. According to the Department of Energy, an energy efficient CFL bulb can save up to 80 percent on electricity consumption versus a traditional incandescent light bulb.
Using Old Equipment
Another thing that could be draining money from your company is old, inefficient equipment. For example, a boiler. Your heating system is something you need to upgrade from time to time. Not doing so could mean much higher energy bills and stiff repair costs to keep your old boiler running. Eventually, it may be a good idea to just go ahead and have it replaced altogether by a company that specializes in providing safe boilers. Really, though, any other major functioning equipment in your building should be evaluated to see if it is raising your bills due to inefficiency.
Business Credit Cards
Many small businesses finance their companies with credit cards. However, many of these business owners have trouble keeping up with due dates and end up with exorbitant fees. The interest rates charged for business credit cards can also be horrendous. In certain cases, a traditional loan may actually be preferable.
Another huge drain on finances for many companies is advertising. If you run a small business, investing a lot in advertising can be a big mistake. While purchasing billboard space may seem like a great idea to get the word out, you may be left wondering what happened when no additional business comes in as a result. Instead, choose advertising choices you can actually track so you can see what you’re actually spending your money on. Some good resources that you should utilize in this regard are Google Analytics and WordPress.
Overall, there’s a lot of ways a business can waste money. However, this shouldn’t stop you from making business investments that can actually benefit your company. Make sure to do the research to ensure you’re spending your money wisely.
Hannah Whittenly is a freelance writer and mother of two from Sacramento, CA. She enjoys kayaking and reading books by the lake. To help keep your company’s office warm, Hannah suggests that you take a look at Nationwide Boiler.