In the entrepreneurial world, passion and determination are crucial, but the only real way for your small business to survive is by constantly generating a profit. Unfortunately, many companies have trouble with this, which often ends in them going under. To avoid this, you need to minimize your losses and combat the financial leaks that could be eating into your income. With that in mind, here are six ways your small business might be losing money and how to stop them.
Mixing Your Finances
Keeping your business and personal finances together is one of the biggest money management mistakes that any entrepreneur can make. After all, when all of this money is being stored in the same account, it’s incredibly difficult to work out what belongs to who. This means you’ll often overspend one way or another. To prevent this, you should set up a separate business account.
Large Unnecessary Purchases
Starting a business is an exciting process, so it’s only natural to want to go out and buy all new equipment, supplies, and property for your company. That being said, more often than not, these large purchases are unnecessary and can put a major strain on your finances. For this reason, you should consider investments carefully and maybe rent an office and equipment for now.
High Employee Turnover
The hiring process is far from cheap, with job advertisements, interviews, training, and more all costing you time and money. With that in mind, it’s crucial that the employees you do hire stay with your company and don’t move elsewhere. You can make this more likely by offering better perks and benefits and showing staff you care. This will reduce turnover and decrease costs.
Failing To Comply
As a business owner, it’s your responsibility to ensure that your company follows all of the laws, requirements, and regulations it needs to. This means investing in insurance, aml checks, and anything else you need to, as well as professional legal advice. If you don’t, you could face fines, loss of reputation, downtime, and even imprisonment, all of which would cost your business.
Theft And Fraud
Small businesses are always a target for thieves and fraudsters, as they generally don’t have as many protections as larger companies do. To avoid becoming a target, you need to invest in extra security measures to ward off criminals. This might means cameras, motion sensors, and even security guards. You should also properly train your staff and establish security policies.
- Outdated Marketing Campaigns
Every company needs marketing to get their name out there and bring in business. However, this won’t happen if you stick to outdated methods and strategies. For this reason, you need to conduct some market research and update your tactic to compete with those typically used today. This will save you from wasting money on marketing efforts that don’t bring in a profit.
Without money, your small business isn’t going to survive. For this reason, you should remember the advice above and do all that you can to block financial leaks in your company.
*This is a contributed post