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A common business principle is that almost every business has waste. Put another way, businesses have added expenses that are unnecessary and make the entire enterprise less efficient.
Some of these expenses may be big expense wastes, but more often, they are smaller issues. After all, that is why these missed opportunities to save money go unnoticed in the first place. Here are 11 common examples of ways a business wastes money.
- Wasting Money on Excess Inventory
You must “spend money to make money”, as the saying goes. But, nobody says you should spend money unwisely. Without good financial management software, it is all too easy for businesses to spend money on excess inventory. It is difficult to estimate how much inventory a business needs without quality financial data to look at historical data and analysis of usage. With this information readily available, it is easier to accurately assess when too much is being spent on inventory that will not move or turn quickly.
- Outdated Office Equipment
Why use expensive scanners when smartphone apps provide simple and efficient scanning without wasting paper supplies and valuable office real estate? Cutting down on equipment like scanners is a great way to take the first steps toward a paperless office while reaping the financial benefits. That being said, there are times when scanners are necessary so shop out exactly what you need before buying.
- Software That Isn’t a Value Add
If your business is paying for software that isn’t getting used, that’s money wasted. Whereas good financial management software is one of the best ways to save money and reap business benefits, 96 percent of organizations report wasting money on unused software, known as “shelfware”. If your business is wasting money on shelfware, discard it and stick with the software that is truly vital for business operations.
- Unnecessary Outsourcing
On the flip side of the software issue, there are great software solutions that make it easy to achieve business tasks that are too frequently outsourced. Accounting and financial management are great examples. Plenty of small businesses save money each year by using financial management software that easily integrates with their accounting software.
- Not Using Energy Efficiency
Businesses need to keep the lights on, literally, but they don’t need to do it wastefully. Energy efficient appliances and lights, can save businesses in a meaningful way. Similarly, make sure office electronics, like computers are turned off by employees before leaving. Businesses can save as much as $71 per desktop computer each year.
- Time Is Money
Too many businesses spend time on mundane tasks that waste money in a practical sense. For example, keeping paper records of bills and receipts. Filing these documents and finding them when they need to be reviewed may take hours, or longer to find a missing document, and those hours would have been better spent on growing the business. This is yet another example where the benefits of financial management software are readily apparent.
- Poor Records
Come tax season, few things are worse for a business than getting bogged down by an IRS audit. The process may even end in paying a civil penalty. These issues are avoidable when businesses invest in proper record keeping and financial management.
- Office Supplies
Office supplies may sound like a necessary expense but think about inventive ways to save. If every desk has its own stapler, pens and the like, consider having one shared office supply area. This will cut down on supply redundancy and will save businesses money to boot. Small businesses can also participate in buying groups, which drive down the cost of supplies.
- Chasing Bad Decisions
Like a gambler who can’t walk away from the table, too many businesses chase bad decisions with more money. Bad business decisions happen, but business owners need the foresight to walk away from a bad venture before compounding the problem. Having this foresight and knowing a losing venture when you see it is an essential way to save and limit the fallout from wasted spending.
- Hiring the Wrong People
Searching for the right employee takes time, and when hires do not work out, the job search must continue anew. Then, employees must be trained. In other words, hiring is an investment that should not be taken lightly. Hiring good people and keeping them satisfied will lead to fewer costs and increased business revenue in the years that follow.
- Not Paying Enough Attention to Expenses
Paying attention to ways to save should not be a yearly endeavor. Quality financial management software makes it easy to review expenses regularly, providing regular information about the latest ways to help your business cut costs.
The bottom line and repeated mantra here is with regards to financial management. All roads lead to and from finance. Check out our web app, Expex, and see if this can help you manage your finances, understand the money side of your business and eliminate the fear and time-consuming methods of managing the financial side of your company.
Now you can rest easy and spend more time growing your business.