Whenever a new business is started, or has even been going for a few years, there are many ways in which the businesses tend to waste money. Sometimes it’s on little things and sometimes it’s wasted when it could easily be avoided. Small unneeded expenses are what could push a business over the edge from profit to loss. There are millions of little ways that businesses waste money. Here are the top 6 silly ways in which businesses waste their money.
1. Outsourcing Too Many Tasks
There are far too many tasks to be completed within a business that people believe need to be outsourced, because they’re too glorified to be undertaken by the business itself. There are, to a certain degree, a number of tasks that do need to be outsourced, due to the complexity or just general nature of them.
This is a classic example of how businesses waste money. Sure it makes things much easier, but it wastes so much money if the things being outsourced could be completed relatively easily by the business itself.
2. Using Better Technology than Needed
Another common way in which businesses waste money, is when they decide to buy all the latest, brand new technology. It’s so powerful, so quick and can do amazing things that nothing else can. Which is great, however it’s not much good when you won’t actually be needing all this extra speed.
Stick to what you’re actually going to be needing. You will probably find that it lasts for your business needs a lot longer than technology normally would for the average person. If your business grows and you need the upgrade, then go for it. At least then you’ll know it will be worth it. However, if you’re just starting out as a business and you purchase technology on a way higher level than you actually need, huge holes will be blown through your budget and you’re likely to find yourself short of cash in other areas of the business.
3. Poor Tracking of Expenses
Actually, just the poor tracking of expenses is one of the common ways businesses waste money. Money gets spent, it goes unnoticed, and so your cash flow becomes out of sync. Budgets can be tapped out before people realize and over-expenditure can occur.
Every small expensive can add up, and that’s why they all need to be recorded no matter how small, in order to ensure all calculations are correct and people are aware of what they have left to spend, how it will affect the business and so on.
4. More Staff than Needed
This guy manages this team, and this guy manages that guy, then that guy reports to this guy… are you confused yet? What am trying to imply is that some businesses have managers for every small area.
Keep it as simple as possible. If you have someone doing a very small amount of what they are capable of, then it’s possible that some jobs could be merged into one role. This will welcome lowers costs and gives an employee the chance to perform at their full capacity.
5. Fancy Equipment
Similar to having fancy technology, purchasing fancy equipment when starting a new business is another potential waste of money. You should only really purchase what you need when first starting a business. Any impulse purchases, that aren’t really needed will destroy your profits in no time at all.
6. Loans
Many startups can’t operate without taking out a loan, which is understandable. But it’s become the common nature for businesses to think they need a loan just to get up and running and become successful, when in many cases this is not true. If you can get away without borrowing money, even if you have to start off a little smaller than planned, then do so. Loans mean a lot of interest.
Businesses might not know when their money is being washed down the drain. But with this knowledge,that will be a story of the past.
