Managing a business is an extremely complex process, especially for those who may just be starting out. One of the managing aspects that is often most difficult to get a firm handle on is the identification of money sinks. Every business probably has at least a few areas or services that waste company money.
So, which money-bleeding areas or services should a business owner look out for? With so many business types and industry services, it can be difficult to know what to look out for. We enlisted the help of 14 members of Forbes Finance Council to illuminate the areas where your own business might be wasting money.
Members of Forbes Finance Council suggest places to look for money being wasted in your business.Photos courtesy of the individual members.
1. Accounting And Finance
Businesses of all sizes spend too much on it, but when you look at the recent successful startups and integration options established by the larger players, it is easy to have a lean finance and accounting function without the headcount. Have a look at Bench or HPC Accountants, who run everything virtually and remotely for you, with tech at the center of their operations. – Solon Angel, mindbridge.ai
2. The Hiring Process
Business owners tend to waste money in the hiring process. There are three keys areas that tend to get overlooked when hiring and cost money and time. First, the job being filled doesn’t have a detailed job description and KPIs to measure success. Second, there isn’t enough time and energy put into choosing the right people for the job. Third, expectations are not set and training isn’t sufficient. – David Gass, Anderson Business Advisors, LLC
3. Custom Websites
Businesses need websites that are both functional and aesthetically pleasing, but it’s entirely unnecessary to spend $15,000 on a custom design if the website isn’t getting any traffic. Start with a WordPress template, and spend your money on getting traffic to the site. Once you have traffic that is converting and earning you money, then revamp and add features that will further increase profits. – Danielle Kunkle Roberts, Boomer Benefits
I’ve seen too many business owners obsess about their website dominating the front page of Google. I’ve watched as businesses spend time and money on SEO content that has little to do with making money — all because they think a good Google result is profitable. If you sell widgets but you succeed in ranking on page one for kumquats, what have you accomplished? You certainly aren’t making money. – Howard Dvorkin, Debt.com
5. Poor Marketing
One big money waster is poor marketing. Depending on your demographic, one type of marketing media may be more successful than your current campaign. Rather than throwing money into multiple marketing strategies, narrow down what is the most effective for your business. Once you’ve found the best way to reach your target audience, put a budget on how much you are willing to spend. – Greg Herlean, Horizon Trust
6. Merchant Account Fees
Most business owners are regularly wasting money on merchant account fees. In many European countries and Australia, businesses are shifting these fees to consumers. Financial institutions have trained businesses in the U.S. to accept high fees for transactions that should be free. In 2019, a business owner will be able to choose point-of-sales solutions at flat rates with no transaction costs. – Christian Kameir, Sustany Capital
7. SaaS Spend
For digital businesses, there are myriad SaaS apps that can help you optimize your processes and maximize revenue. Before you know it, subscription costs can add up and cut into your bottom line. We use Cleanshelf, an app that monitors your SaaS spend and helps ensure you’re getting the maximum ROI. Cleanshelf makes your SaaS spend an even better investment in your company’s success. – Ismael Wrixen, FE International
8. Sales And Marketing
Don’t throw money blindly into sales and marketing and expect a return. Your sales and marketing budget should be 10% of revenue. I see businesses overpaying sales staff when they are not producing. They are paid way more than they are producing. Also, you cannot cut sales and marketing; you must have the right people in place, the right target markets and a strategy. – Jody Grunden, Summit CPA Group
9. Poor Tax Planning
Many business owners are giving Uncle Sam too much of their hard-earned money. The majority of business owners leave it up to their bookkeeper or CPA to help them with tax planning. However, when was the last time these professionals reached out to you with tax-saving ideas? A good tax advisor will come to you with ways to reduce your taxes and help you navigate the tax-planning landscape. – Justin Goodbread, Heritage Investors
10. Facility Expenses
Your facility expenses — rent, utilities, etc. — can be a drain on your company’s finances. A cost-effective solution appealing to business owners and employees alike is allowing your team to work remotely. This saves you, the business owner, money, as you will not need desks and office space for your entire team. Your valued employees enjoy not having a commute to work, ultimately giving them more time to enjoy life. – Shane Hurley, RedFynn Technologies
11. Perfecting The Product/Service
Business owners sometimes get too passionate about their service/products. As a result, they end up spending too much on perfecting the offering. There is never a perfect version of your product/service when you are the business owner. While it is important to always update and be current according to market dynamics, you need to pay attention to other critical areas that bring new business. – Breana Patel, Bonova Advisory Inc
12. Paper Products
In my opinion, an area where businesses are regularly wasting money is on paper products. Now that we’re fully in the digital age, there are many solutions that cancel out the need for buying/printing paper. Almost everything these days operates electronically from the cloud, and I believe getting rid of printing in offices would save a ton of money and also do good for our environment. – Jared Weitz, United Capital Source Inc.
13. Print Advertising
Print advertising is the most overpriced form of advertising. In the current era of digital communication and instant outreach, print advertising such as mailers, billboards and traditional methods of ink-to-paper is more overrated than in any previous time of doing business. Though print works for certain businesses, digital ad spend has a much greater ROI and reach than other options. – Sina Azari, PRESENT Financial Partners
14. Your Own Time
Business owners often misjudge the worth of their own time. For example, owners will receive hundreds of emails in a day and can often feel like they are failing if they do not keep up with them. However, they need to stop and ask if this is the best use of their attention and if it is better handled by someone that reports to them. Building dependency with the staff will ultimately end in failure. – Anthony Carr, United Wound Healing, PS