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Plugging the leaks: Stopping your business from draining money

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It’s the old maxim – you need to spend money to make money – but there may be areas within your business where you are overlooking costs that are doing nothing to profit you at all. Chances are, you will have already sprung more than a few leaks, but thankfully, there are ways to fix them. In this article, we will show you where you may be wasting money. In some cases, you will need to spend more money to alleviate the problem, and in others, you can eliminate the leak at the source immediately. It’s worth getting to the root of the problem as soon as you can, especially if you are keen to maximise your profits this coming year. So, without further ado, let’s find out where some of those leaks may be coming from and let’s get your finances back on track.

Check your accounts

Before we get into specifics, you can do some of the hard work yourself, or at least make use of the talents of your accountant. Look at your expenditure and consider where your money is going. Are there any areas where you need to cut down on your spending? Are there areas where you are seeing no financial return on the money you are splashing out? If so, you will know where to plug the leaks yourself. If you are in any way unsure, continue reading the rest of this article.

Manage your employees

Unless you are running a business from your bedroom, you probably have a number of employees working with you. In most cases, they will be a necessity for your business. However, consider the people you employ. Not only do you need to cover their wages, but you also need to factor in training, pensions, taxes, etc. Employing somebody is expensive, and while this can be expected, you need to ensure the money is well-spent.

Plugging the leak: If you have a lot of employees on your payroll, but not enough work for them to do, you may consider cutbacks. While this is painful for any employer, let alone the employee, sometimes letting staff go is the best option if they aren’t being utilised effectively. Secondly, would outsourcing be more cost-effective? Hiring another company on an ‘as and when’ basis may be more profitable than hiring staff who are sometimes surplus to requirements. We will cover outsourcing again later, but it’s worth weighing up the pros and cons.

Pay less on your utility bills

Running a business on any kind of premises is going to cost you money. Electricity is usually the biggest expense, though you may also have regular gas and water bills to pay as well. Consider why your utility bills may be high. Not only are you heating your premises, but you will be using a lot of electricity through lighting, computers, and other equipment that is necessary for the work your business undertakes.

Plugging the leak: Get into the mindset of ‘going green’ and do your bit to save the environment, while saving yourself money to boot. There are simple things you can do, such as having your heating on a timer switch, so you aren’t burning fuel when you aren’t in the building. You might also save money by using energy-efficient light bulbs, which are more expensive to buy, but will save you money in the longer term. Then, as you would do in your home, make sure you turn off the lights when you leave a room, and unplug your any unused tech.

While a full-scale renovation of your building may be an expense you can’t incur, you could still consider solar panels or larger windows, to allow for natural heat, rather than using the artificial heat that hikes up your utility bills during every quarter. Then, after doing your bit to be eco-friendly, consider ditching your current utility company and find a cheaper one using a price-comparison service.

Consider your marketing costs

You don’t want to disregard this area of your business, as it’s essential you get the word out about your service to as many people as possible. Whether you hire a marketing agency to do this on your behalf or have a team of people on your staff who are responsible for this aspect of your business, you are going to incur some hefty costs. In one respect, this shouldn’t matter. The more people who know about your business, the more money you make. However, there are ways to save money.

Plugging the leak: First of all, consider who you are marketing to. If you are targeting the wrong demographic, then you are clearly wasting money as well as your time. Focus your time and energies on those people who are guaranteed to use your product and service, and carry out research if you are in any way unsure.

Secondly, consider where you are spending money. If you are still resolutely old-school, you may be spending a fortune on stamps and paper, sending out newsletters or flyers to homes and businesses. You may also spend money each month advertising in your local media. These are viable ways to market your business, but in today’s society, not necessarily the most cost-effective methods. Instead, consider digital marketing, focussing your energies on your social media presence and capitalising on your website. In most cases, there will be no extra cost on your part, unless you hire a digital marketer or pay for such things as Facebook advertising.

Curb your tendency to outsource

We have already raised one possible advantage of outsourcing, so we aren’t going to contradict ourselves. However, you need to consider how effective this is. If there are tasks you can’t manage yourself, then outsourcing is a good idea. Provided the company gives you value for money, then long may this continue. On the other hand, you may not need to outsource at all. Here’s why.

Plugging the leak: Don’t outsource tasks if you have the skill for the job yourself. Provided you have the time and the talent, add those tasks to your workload. You may also have members on your team who can take on extra responsibilities as well. They may have untapped talents, such as web design and blog writing, so there is little point in outsourcing to another firm if your employee has the time to focus on this themselves. Not only will it help you cut costs, but it might also improve your employee’s morale, and give them something new to add to their resume.

Ask yourself: Are you wasting money?

We aren’t necessarily saying you squander money, but then again, you may be. What do we mean? Well, consider your daily ritual. Do you make regular trips across town for business meetings? Do you shop at the local bakery for your lunch? Are you paying for technology that looks good, but isn’t really useful for the business you are operating? In short, whether it’s in small or large amounts, is there money being spent that could have been better used elsewhere? Chances are, the answer will be ‘yes.’

Plugging the leaks: Let’s cover the areas we mentioned for starters. Those business meetings you have across town may be useful, but consider the fuel you are using getting from A to B. Surely it would be more cost and time-effective if you held the meetings from your office, using Skype or any other kinds of communication technologies available to you. Then there’s the important business of your lunch. Whether the money comes out of your own pocket or as part of your business expenses, you can save a lot of money by making your own sandwich before you leave for work in the morning. The same applies to your staff. Don’t buy in lunch for anybody (or worse, hire a caterer) when they can sort themselves out instead.

Let’s touch upon that issue of technology we mentioned. While buying the latest tech is advantageous – less costly to run, enhances productivity – it’s a waste of money if you are purchasing something you will rarely use. It will only use up valuable space, and if you leave it plugged in, it will add to your utility bill, as well. In most cases, you should forego buying something entirely if it’s not a necessary requirement, or consider sharing resources with another company, to halve the costs for both of you.

Bottom line

We hope you found this article useful. As you have read, there are many ways in which your company could be draining money. However, as stated, there are ways to plug the leaks. As you look ahead at the coming year, consider your finances, and if any of the above is relevant to you, make every effort to fix the matter before the leak gets worse. In some cases, the solution will be a simple one and you can make amends immediately. In other cases, you will need to focus your energies and work hard to get your finances back on track. Either way, you will save money, and you will see a marked difference in your businesses bank account in the weeks and months to come.

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