1. Trying To Look ‘Big’
Since the grass is always greener on the other side, small businesses love the idea of appearing big. It makes them feel “established.” Unfortunately, all too often we don’t measure size by profit margin, impact or reach but by the square footage of the office or the number of bodies hurrying through it. You can literally cut your budget in half if you only lease and hire to your needs.
Oftentimes, founders of small companies come from large corporations and feel the need to hire assistants. While I understand this is often needed, other times it is simply a formality and the assistants are doing simple tasks that can be done by an employee. In a small company, everyone should step up to the plate and help each other, eliminating the need for positions that aren’t adding immediate value.
3. Technology Fees
Technology has made all of our lives easier. However, from credit card transaction fees to software and application costs, it’s easy to lose a handle on things. Focus as much as possible on combining financial tools and services with fewer companies—companies that can successfully bundle products and services to provide more value, better support and lower overall costs.
4. Office Space
Many small businesses don’t need a traditional office, especially if they have mostly professional knowledge workers. Today’s communication tools make it easy to work from home and still stay connected and collaborate. Eliminating a traditional office can save thousands of dollars a year and improve employee morale because they don’t have to fight traffic.
5. Memberships And Subscriptions
Mindlessly buying memberships or subscriptions that they do not fully engage in or use is a huge waste. Small-business owners need to assess the rate of return on these investments to decide if they should keep or discontinue them.
6. Billing And Collections
Financial operations can tie up both time and budget for small-business owners. While billing and collecting from customers is absolutely critical, it’s equally important to eliminate the wasted budget and time that businesses so often spend on managing accounts receivable. The most capital-efficient business owners are automating financial operations to avoid both waste and frustration.
7. Repetitive Tasks
Business owners are constantly juggling numerous responsibilities, and it can often feel like a zero-sum game. Oftentimes, trying to do everything on your own results in lost opportunities. Building systems, empowering employees to support some of your personal responsibilities and outsourcing low-cost activities can help you save money while improving productivity and morale.
I have nothing against recruiters, but businesses could be saving the often 20%+ fee they charge on candidate salaries. The savings can be spent on more experienced candidates, targeted ads and events, and referrals. From our experience, an employee referral program is far more effective and budget-friendly. Who better to bring you top candidates than your own top employees? It can also help with retention.
9. Food Orders
Ordering food can get incredibly expensive, especially in large amounts. Take advantage of services out there that can limit the “per head” cost of food ordering. Or, even better, if time isn’t a factor, go to a grocery store and buy things directly.
10. Payroll And Tax Filing
While it may seem as though handling your payroll and state tax remittances on your own is saving you money, it’s actually the exact opposite. If you break down the hours you spend ensuring payroll is correct and completing tax filings you’ll realize it’s a lot more costly than you think. And not filing on time and correctly can add huge dollars in penalties and interest!
11. ‘Voluntary’ Taxes
Many business owners don’t realize they are paying more than they need to on their taxes because of poor structure and lack of planning. Most business owners do not evaluate their team of financial professionals with taxes in mind. By engaging business-efficiency coaches, tax attorneys and others who plan for taxes, most business owners can save thousands in “voluntary” taxes.
12. Items That Don’t Advance Your Cause
When running a business, look at every expenditure and do not waste any money on items that do not advance your cause. Determine the essential elements, then make a list of the “nice-to-haves.” Only after you break even should you tap into the second bucket. Cash flow is the lifeblood of a business and you always need a Plan B, C, D, etc. Those who are persistent make it (and keeping it lean helps).
13. Employees Who Are A Poor Cultural Fit
Small businesses can’t afford to keep employees around who no longer fit the culture. You might feel like you owe them your loyalty—especially if they’re family members or long-term employees—but that alone isn’t a reason to keep them on the payroll. Holding on to employees means holding on to their added expenses, which injures the growth of your company. If they aren’t a good fit, let them go.
14. Everyday Banking Fees
An often overlooked money pit for small-business owners is banking. Seemingly small expenses such as monthly fees, ATM fees and wire fees can add up over the course of a month and certainly by the year’s end. If you’re subjected to any fees for everyday business banking, it is time to explore new no- or low-fee options.
15. Credit Card Processing Fees
Like most businesses you probably accept credit cards in payment for your goods and services. Credit card processing fees can vary widely from one provider to another. If it has been 12 months or more since you have looked at your pricing compared to current market pricing, do so now, and continue this habit annually.