5 Ways Businesses Waste Money – Without Realizing It
Most businesses are so focused on generating revenue that they forget about the expense side of the balance sheet. However, a dollar saved is as good as a dollar earned. If you really want to improve your profit margin and send your net revenue soaring, you should take some time to identify and neutralize big money-wasters.
Here are a few of the most common ways small businesses waste money.
- Hiring Full-Time Employees
As your business grows, you’ll need to bring new people onto your team to pick up some of the slack and help you scale with greater efficiency. However, be wary of hiring full-time employees.
On the surface, a full-time hire can look affordable. But you have to look at all of the ancillary costs associated with an employee. Research shows that for every $50,000 an employer pays in salary, they end up paying closer to $70,000. These additional costs come in the form of benefits, payroll taxes, and other expenses.
Sometimes you need a full-time employee. However, always run the cost analysis and see whether it makes more sense to outsource or hire a VA. Doing so could save you thousands.
- Expensive Office Space
If the COVID pandemic has shown us anything, it’s that commercial office space isn’t always necessary. Thanks to advances in technology – including video conferencing tools, cloud storage, and project management apps – running a remote team is more practical than ever.
Consider whether you actually need office space. Or, at the very least, look for ways to downsize and move into a smaller space. This could provide a massive boost to your bottom line.
- Poor PPC Ad Strategy
Pay-per-click (PPC) advertising is a popular strategy for generating traffic and driving leads to targeted revenue-producing landing pages. But it’s important to consider if your PPC ad strategy is working.
Research shows that less than 25 percent of PPC ads produce any conversions. This is because most agencies do it wrong. If you’re not generating the kind of results you need, it’s time to fix your broken ad spend. You can do this by carefully researching and partnering with the right PPC management company.
The beauty of PPC advertising is that you only pay for traffic that ends up on your page. (In other words, you aren’t wasting money on useless impressions.) However, you must drive the right traffic to these pages. A PPC ad strategist can help you refine your campaign so that you get max value out of each click.
- Expensive Tools
We’re living in the middle of a software boom. Software-as-a-Service (SaaS) companies are cropping up by the thousands. If you aren’t careful, you can end up adding too many tools to your tech stack. This leads to compatibility issues and a bloated expense sheet. Consider purging your list of tools and only using the ones that have useful features that directly impact your bottom line.
- Overlooking Tax Deductions
Most small business owners overpay on taxes without knowing it. In some cases, this results in thousands of dollars of unnecessary payments every single year.
“Often, a small business owner might not know about tax deductions and so doesn’t take advantage of them when calculating income tax due by the company,” entrepreneur Marc J. Marin writes. “Other times, a business owner might not maintain detailed records of expenses that would enable taking these deductions.”
Feel free to do your own research and look for opportunities to save, but taxes aren’t something you want to do on a DIY basis. Hire a tax expert who specializes in helping small business owners and let them lead the charge.
Get Your Finances in Order
If you’re like most business owners, balance sheets, budgets, and financial analyses aren’t things you look forward to pouring over. However, if you want to tighten up your cash flow and increase profits, you have to be cognizant of where you’re coming up short.
If nothing else, we recommend analyzing the issues discussed in this article. By proactively addressing these areas of concern, you may be able to save thousands of dollars every single quarter.