The goal of any business is to make a profit. However, if your business is making sales but seeing little-to-no profit, you might be leaking cash. There are some financial statements that you would need to consider including your cash flow statement, balance sheet, profit and loss statement. These documents can help you see what areas need attention within your business.
Even though it may take some work to trim the fat, identifying and eliminating unnecessary spending will help you strengthen your bottom line and better position you to be approved for growth capital, like an SBA loan.
Common Money Leaks Hurting Your Bottom Line
You need to spend your marketing money wisely on the channels that will return the highest return on investment. Focus on the channels you can track. It will be easier to measure the views, clicks, bids, traffic and ROI on the following channels:
- PPC ads
- Email campaigns
- Social media marketing
- Content marketing
You should use traditional marketing methods still however, if your budget is limited, use the channels above to efficiently scale effective channels or cut inefficient advertising before you have drained your cash.
Software is an essential tool for any business from bookkeeping, marketing, payroll, analytics and more. These costs add up fast especially when you are paying for the tools you are not even using.
Make sure that you are doing regular audits to account for the software your business is paying for and using. Make sure there is an internal and external point of contact for each software solution. Check in with the users of the software to make sure they are still seeing value from the tools.
You need to explore and demo new products as your business grows and your goals change. You might need to switch over to another solution that is more relevant to your business. Whenever possible turn off auto-renew annual licensing. Having to renew your license each year will force to reevaluate the software before spending your cash.
Minor miscellaneous expenses
Small expenses can add up fast. Some of these include company lunch, new office appliance, and more. You do not need to cut all your miscellaneous expenses however, you need to keep track of them. Budget for these expenses and strive to stay within your constraints.
Regularly examine your expenses at the end of the month and quarter to see what can be cut. Create company policies for how teams can (and should) use their budgets. This will help ensure you’re spending your hard-earned cash on what matters most.
Poor time management
Time is a valuable asset and also most business’s worst cash leak. Create an effective time management system by communicating the value of your ’ time. Time hacks will help you save minutes throughout the day and up to the rest of the year when applied properly.
The Bottom Line
Review your monthly budgets and statements so that you can scrutinize where your money is going. There is no better feeling than having control over your business, your books, and the future growth of your business.