The 9 Biggest Money Wasters In Your Business
Your business is losing money right now at an alarming rate. Every dollar spent that does not earn long-term profit for the company hurts its profitability. You'll be surprised at what some of those big money wasters are.
1. Pay per click advertising. It seems simple and cheap, but a lot of money gets wasted on this type of online advertising due to a lack of expertise on how to run an effective campaign. Home designer, retailer and owner of Opad, Andrew Chris thinks that irrelevant pay-per-click traffic hurt his business. He says that “in order to capture as much relevant traffic from Google as possible, we used Google's 'Broad Modifier' ad-type, which triggers our ads if a predefined set of keywords are all in the search phrase. Unfortunately, ads are also triggered for negative keywords which cost us money.”
Companies can have similar problems with other types of social media advertising on Facebook, Twitter and LinkedIn.
Solution: Copywriting, demographic targeting, and choosing the right keywords can trip up the novice. Get help from a search engine marketing professional like Hubspot and Dex One before launching a campaign.
2. Travel expenses. Small-business owners shop hard for the best airline, hotel and car deal before they leave for any trip. Unfortunately, once they get on the road, they waste a lot of money. This includes $5 coffees, $12 alcoholic beverages, $5 sodas from the mini bar, city parking and taxi rides—not to mention that client dinner that went way over budget.
Solution: Look at public transportation from the airport. Many times, this can cost 10 percent of a taxi or rental car. Ensure that the hotel is near planned appointments so there's less costly commuting to and from those locations. Book hotels that have kitchens in the room or pack food for the trip. Remember, an alternative to traveling is videoconferencing services like Skype, iMeet and ooVoo.
3. Wrong smartphone data plan. Because of the fear of overages, most small businesses use the unlimited plan. According to Consumer Reports, 48 percent of consumers use less than 300 MB a month.
Solution: Check your company’s plan and negotiate with the provider to get one that matches usage. Telephone bills are also ripe for renegotiation, or you can move to using a voice over IP solution (VoIP) from companies like Nextiva or RingCentral that offer a flat rate per phone per month.
4. No follow-up procedures in place. Small businesses spend a lot of marketing money generating leads for their company that they never follow up on to get the sale. Sebastian Marshall says that many companies do all the work needed to get sales and referrals, but then have poor follow-up and lose business that was “80 percent to 95 percent through the sales pipeline.”
Solution: Have a process in place that tracks every lead, not just for the initial contact, but on a monthly basis. Having a customer relationship management system (CRM) like Salesforce or High Rise is critical for success.
5. Indecision. Lots of money is wasted because a decision is delayed or never gets made. Motivational speaker Bryan Toder says that “procrastination is not just laziness; it happens because people don't see the possible pleasure of the accomplishment or they don't perceive the consequences of their inaction.”
Solution: Most decisions are made in an instant, then the manager spends the rest of the time justifying that decision. Make small decisions quickly, evaluate results and take a new action to get closer to success.
6. Non-retail office space. This fixed expense is too big or extravagant for what the company needs. Small-business owners overpay and overbuild because they miscalculate how fast their companies will grow. Large or fancy office spaces also can feed their egos.
Solution: Can the company be virtual? What is lost if everyone works form home? Determine what investments need to be made to get that to work compared to the current cost of office space.
7. Website design. Most small-business owners focus on a unique website design and pay handsomely for it. They also invest too much in branding and logos when their company launches.
Solution: Pick a template for an open sourced Web tool like WordPress. Focus investments in keeping content updated, reviewing website analytics, using CRM and e-commerce.
8. Bad hires. Hiring the wrong employee typically costs 20 percent of his or her annual salary. This doesn't even include the lost productivity that a successful person would contribute to the company.
Solution: Be slow to hire and quick to fire. Make sure prospective employees match the company culture before testing their skills.
9. Large investments in technology. Too many small-business owners invest in large hardware and software solutions that need to be customized. Their business changes, and then they need to migrate to a different system.
Solution: Use applications in the cloud that charge a monthly fee. This more closely matches a variable cost model. Reputable vendors will constantly innovate their technology, and their small-business customers will benefit with little cost.
What's the one thing your company wastes the most money on, and how are you trying to fix it?
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