You started your business in the first place to offer a service or product and to earn money in exchange. You had to make an investment and as a business person you know that you have to spend some money to earn money. But if you don’t take control and spend too much, you will find that you are not making much profit. If you own and run a small business you should be aware of these money drainers, which can slow down your business growth or even destroy the business.
You are very poor at promoting your business
Markets, products and businesses today thrive on promotion. You realize that everybody out there is doing it and that you should do it too. What you need to do, is find a position for your business and in the market. You need to differentiate yourself from the crowd through promotions. If you are spending money of ineffective business promotions, you are indeed wasting lot of money.
You don’t have a Business Plan
Everything works well with a plan and the same is true of your business. The smart thing to do when you start your business is to set goals, targets and plan how to reach them. This is more or less your business plan. Without a plan you don’t know how well your business is doing. For growth to take place, you need to base all your decisions on this plan. Otherwise wasteful expenditure will occur, which can hurt your business.
Retain Poor performers and Useless Employees
If you have people on your rolls, who are ineffective because of their lack of skill, experience or training, you are causing a loss to your business. If you are paying them for not contributing, and they really cannot manage the job, you are wasting your money.
Your financial record keeping is inefficient
In any business as a matter of routine, there is an inflow and outflow of cash. Every business must have a good record of how much cash is coming in and what is going out and for what purpose. If the records are not maintained properly, there is scope for cash leakage, wastefulness which will harm your financial position. The lack of proper financial records plays a major part in promoting wastefulness.
Your Overheads are excessive
When running a small business you have to keep the overheads at a minimum. You need to pay your utility bills, your employees and other things which are absolutely necessary. But if you want to make a public show of your business and how affluent it is, it is sheer financial wastefulness. To keep overheads low, you can even think of using the less expensive options of utilities to save your money. Also hire the office space that is absolutely necessary. Excessive office space and rent eats up large chunks of your budget.
Now that you are aware of what can cause financial blockages in your business, you can take the right steps and measures to reposition your financial set up so that the leakages, waste and overspending does not destroy your business.