Have you ever looked at your company’s balance sheet and thought, “where’s all my money going?!”
If something seems off about your financials, there could be some money leaks in your business. And until you plug them, they’ll continue to hurt your bottom line.
Here are six common culprits to watch out for (and how to fix them).
Did you know that employee theft costs U.S. businesses $50 billion a year? This can take a variety of forms — from employees stealing inventory to redirecting funds — so there’s a lot to watch out for.
Of course, you can’t be everywhere at once, so it’s important to plug this leak by implementing a system of checks and balances. For example, you may want to avoid anointing one single person to fully control your business’s finances and confidential information.
Teaching your employees how to spot fraud could also help. Empower them to report suspicious behavior without fear of retaliation, since most people won’t say anything if they’re scared of the repercussions.
Finally, if you do catch a workplace crime, act swiftly (and with the consult of your legal team) and publicly so every employee knows how seriously you take infractions.
There are many facets to this particular money leak, but it comes down to productivity. If you hire the wrong people, for example, they could waste time learning (or worse — not learning) the skills they need to get the job done. And as you know, time is money.
Additionally, if people aren’t happy with your workplace culture, you could end up with a high turnover rate, which is extremely costly — both in terms of money and morale.
Ineffective managers can also cost your company a lot of money. If they spend the majority of their time micromanaging instead of leading, those are valuable salary dollars gone to waste.
To fight against this leak, create an environment where your employees feel validated, supported, and respected. In addition, invest in training employees well from the beginning and consider hiring slowly and firing fast. Make sure you’re not extending an offer of employment just because you need someone to fill the role ASAP! Everyone you hire should be technically qualified and a good culture fit.
It’s perfectly fine to test new marketing channels, but continuing to funnel money into channels that are ineffective is like throwing money down the drain.
If you want to fight against this leak, you’ll first want to think about your customers and the types of media they consume. Are they more likely to be on Snapchat or watching daytime television? Listening to podcasts or the radio?
After you’ve figured out which channels you want to test, it’s time to figure out what you would deem a success. Are you looking for email signups? Purchases? Brand awareness? Write your goals down so you can easily see if your test is effective and worth the money.
Finally, allocate a small budget and run your test. If it meets your goals, that’s a good sign that it’ll work with an even bigger budget. If it wasn’t effective, either kill it completely or wait a few months and test it again later.
This one’s pretty simple: Be mindful of cancelling services you’ve stopped using, whether that’s your landline, a newspaper subscription, or a file-hosting service.
When you onboard a new service, assign a point person/team (whoever will be primarily using the service), and regularly ask them if they’re still getting their money’s worth. For annual subscriptions, you may also want to mark the date the contracts are set to renew on your calendar and evaluate whether they’re worth it before then.
You won’t win over any hearts by penny-pinching. However, seemingly small purchases can add up. If you say “yes” to every lunch, office supply request, piece of swag, and team-bonding outing, you could soon find yourself in the red.
To fight against this leak, regularly audit your expenses every month or quarter and see what you can eliminate. In addition, plan out your budget at the beginning of the year and use it to write a clear expense policy that explains how much teams can spend for bonding activities, when taking someone out to lunch is expensable, and other important scenarios.
Even if you’re a new company eager for business, don’t make the critical mistake of undercharging customers. You need to keep your business running and your employees paid as much as the next business, so come up with a fair price for your products and services, and stick to it.
Thanks to the internet, you can easily see what your competitors are charging and set your prices accordingly. If you want to entice new business, consider holding a promotional offer that’ll allow customers to try you out at a discounted rate and decide whether they want to do business with you (at your true rate) in the future.
Bottom line: Every dollar wasted is a dollar you’re unable to use to grow your business or spoil your employees (which includes yourself!), so make sure you’re spending thoughtfully. And if you do spot a leak, plug it — stat!