Your business will most likely dip into the red at least a few times over the years, but those periods should be few and far between. If your company is constantly hemorrhaging money, then you might need to address a few of your worst financial sinkholes. Here is a look at four of the most common ways that companies lose money and a few steps that can be taken to address those issues.
It is an unfortunate fact that almost every company will face at least a few legal issues over the years. Luckily, most of those problems can easily be taken care of with a good attorney and the proper insurance. Before opening your doors, you must have insurance coverage for any potential liability issues regarding your storefront or products. You might also want to consider having a lawyer on retainer who can help you with a variety of legal services.
Buying Second-Rate Equipment
Purchasing inferior equipment will save you a little bit of money initially, but that practice might end up costing you in the long run. Maintaining specialty tools and devices will become incredibly expensive if you are forced to deal with constant breakdowns and malfunctions. From commercial heat pumps to industrial presses, you want to be sure that you are getting high-quality products, like those offered by MTA Australasia. After you have invested in that equipment, you must establish a strict maintenance routine that all of your employees adhere to.
Investing in an Inefficient Marketing Campaign
If you aren’t constantly testing the efficiency of your marketing campaign, then you will have no idea if it is actually bringing in new customers. Even if the campaign looked good on paper, those ideas might not translate to the real world. Smaller companies only need to invest in a few key marketing tactics that have a proven ROI. Depending on what industry you are in, you might benefit from a handful of inexpensive digital marketing strategies such as setting up a website or hiring a social media manager.
A High Employee Turnover Rate
As a general rule, companies should try to keep their employee turnover rate below 15 percent. A business owner will need to address deeper issues if the rate ever goes above that number for an extended period of time. Many different tactics can be used to reduce employee turnover such as tweaking the vetting process, improving wages, and hiring a dedicated HR team.
Business owners who are still having a tough time tracking their losses might want to hire an accountant or financial auditor. One of these specialists can carefully pour over every aspect of your company in order to identify some of the worst money sinkholes.