Looking After the Pennies: 6 Ways Small Business Owners Can Avoid Wasting Money

It probably won’t come as a surprise that a huge number of small businesses fail within the first 18 months of trading. There are several reasons for this happening, but they usually all lead to the same path – finance. Whilst it would be unrealistic to expect a start-up to generate huge profits, the figures ultimately do need to stack up.

Every penny matters when it comes to ensuring your small business survives, so it’s important to make sure that what you do spend isn’t money down the drain. Here are 6 ways small business owners can avoid wasting money.

Suppliers

If you have been using the same supplier since you started up, it’s worthwhile finding out what their competitors can offer you for comparable products. If your current costs are over the odds, it’s worthwhile speaking to your suppliers and trying to negotiate new rates.

Explain that you are happy with the service but feel that you may have no choice but to shop around if there is no pricing leeway. Good business relationships can be hard to come by, so it’s worthwhile sticking with them if you can – but only at the right price.

Outsourcing

If you find that you are outsourcing the same tasks regularly, it may be far cheaper to take on extra staff to do the work instead or have existing employees take on some additional responsibility.

Outsourcing is a great way to have projects carried out on an ad hoc basis, but if these projects are becoming more regular, you could be spending a fortune unnecessarily. You will most likely pay far more by outsourcing, so it’s worth crunching the numbers.

Accurate quotations

If your business involves fixed fee work, it can be very difficult knowing whether your quotes are accurate and will cover the time you or your staff spend on each project. Using a timesheet app can alleviate a lot of the issues you may be faced with. The software, which can be used on a variety of devices, allows the allocation of a unique reference for every client or project. Employees then log their hours against each project and can also add descriptions of works that have been completed.

This method of tracking not only allows you to see whether you have underestimated your original quotes but also provides you with the information you need to bill future projects more accurately. It’s also a great way of monitoring whether procedures are taking too long and how employees are spending their time.

Marketing Spend

Wasting money on marketing is very easy to do. There are so many online marketing platforms to choose from it can be hard knowing which to go with and what to spend. One of the best ways to ensure that you aren’t wasting money is to establish where your existing and new customers are coming from. It’s all well and good generating an influx of new interest, but if you don’t know where they heard about your business, how will you know which methods are working in your favor?

When a customer places an order or rings to enquire about your company, try to find out where they heard about you. After a while, you will identify the methods that work in your favor and those which are pointless.

Running Costs and Staffing

If you don’t monitor your running costs regularly, you could waste a huge amount of money. Perhaps your utility bills are excessive, or you are paying too much for your premises. Establish how much you are spending, and find out if changes can be made to reduce your outgoings.

Are your staff working to their full capacity? It may be that you have members of staff who spend 50% of their time doing tasks that aren’t even necessary. Duties may need to be reallocated, or you may decide that you need to let some of your team go. No-one enjoys making staff redundant, but you can’t afford to pay staff who aren’t busy either.

Technology

Whilst it might be tempting to fill your office with the latest technology and provide your staff with the latest mobile phones, it isn’t necessary and could be a complete waste of money. If there are cheaper products available that will provide the same results, it makes good financial sense to buy those instead.

Second-hand products such as photocopiers and printers often come with the same warranty but are around half the price. Make decisions with your head rather than your love of gadgets, and you could save yourself a fortune!