How to Avoid Common Money Leaks in Your Small Business
Money leaks in your small business eat away at your profits without you even knowing it. Even if your business seems to be in great financial health, you should regularly check for leaks to ensure that you’re not unwittingly wasting money. Plugging money leaks can help to reduce your spending and boost your profit margins without too much extra work on your part. Here are the most common money leaks to look out for, and how to fix them.
1. Online Advertising such as Facebook and Google
It’s so easy to let advertising fees get out of hand. Social media pay-per-click fees are one of the biggest culprits for uncontrolled spending. While the costs seem low on an individual per click basis, they can add up super-fast. Monitoring your spending every couple of days or even daily is the key to avoiding a big bill. It’s also important that you regularly review the effectiveness of your campaigns. If they’re not bringing in business, they’re a wasted expense.
2. Subscriptions
At some point, we’ve all signed up for a free trial with no intention to continue, then forgotten all about it and ended up paying. Other times, we stop using a service but forget to cancel the subscription. It’s all too easy to let your business leak money this way, but it all adds up. Review your subscriptions regularly and promptly cancel any that are no longer benefiting you.
3. Power Usage
Small mistakes like leaving the lights on overnight and forgetting to switch off devices may not seem like a big deal, but over time they can seriously eat into your profit margins. It’s important to get into good energy saving habits and encourage your staff to do the same.
There are many other ways to cut down on electricity usage, such as investing in insulated blinds or switching to energy-efficient lightbulbs. Although these changes do present an upfront cost, they will save your business a significant amount of money in the long term.
4. Office Supplies
It’s easy to go over-the-top with office supplies, so take some time to assess what is and isn’t necessary. I’m guilty of “needing” post-it notes in every color of the rainbow. The need is real! But while thousands of sticky notes are fun, they’re hardly a necessary expense. As a notary, I’ve also become a pen snob. This is okay until one day you are storing 562 blue pens in your office closet. Printing can be another waste of money. View as many documents online as you can or download and save them for future use. Cloud based software makes this expense-saver much easier. Make technology your new best friend!
5. Credit Card and Bank Fees
Being lax with your credit card payments is a surefire way to create unnecessary costs. By clearing your balance each month - or at least as much as possible - and paying attention to any annual or hidden fees involved, you can save your business money and boost your profit margins.
When signing up for a credit card, don’t get distracted by the attractive rewards. Make sure that you read the fine print and understand the fees before you choose a card. This will help you to use your card wisely and avoid any money leaks.
6. Cellphone Bills
If you’re not keeping a close eye on your cell phone bills, you could be paying a lot more than necessary. Make a habit of reviewing your charges every month to ensure that you and your staff aren’t exceeding your plans. Take a close look at your usage, too, because you could be paying for more than you’re actually using. It’s also worth shopping around regularly to see whether or not you could benefit from switching plans or providers. The opposite can also be true if you are a techie snob and always need the latest and greatest phone. Upgrading too often is a significant source of expense and should also be monitored.
How Do I Plug the Leaks?
Creating a monthly budget for your business is essential. It helps you to monitor overspending by knowing exactly what to expect for actual charges. Also, get into the habit of regularly performing basic checks to maintain a healthy profit margin and prevent your business from losing money. Using a professional Bookkeeper or Accountant will make this task even easier. By plugging these common money leaks, you can cut down on costs without making any real sacrifices. Regularly checking for leaks helps you to make your business budget go further, so make sure you don’t grow complacent.
