5 Small Things That Cause Your Small Business to Bleed Profits One Drop at a Time

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On average, around 20% of small business fail within the first year, and around 50% close after their fifth.

Although there are multiple causes for a business’s failure, a major one is losing profits, which is the lifeblood of every successful venture. But when you know where to look, it’s possible to pinpoint the areas that are wasting valuable cash. Perhaps you’re new to running a company and you’re not sure which areas cause a financial loss in business.  

Sounds like you? Don’t worry, you’ve come to the right place. Here are five things that can cause this.  

1. Not Tracking Expenses 

A major cause behind small business failure is not properly tracking expenses. As a result, you’ll waste a huge sum of money without knowing where it went. Luckily, you can prevent this by using a budgeting app for your business. 

Note, no expense is too small as it’s often the smaller ones that get overlooked and build up over time.  

2. Marketing Incorrectly 

Businesses also lose money by not marketing their brand properly. You needn’t spend a fortune on your marketing efforts because most are free. For instance, grow your audience by posting regular updates on social media and connecting with customers. 

You should also optimize your website and curate an email subscriber list as it lets you stay at the forefront of your client’s minds.  

3. More Staff Than Necessary

Profitable businesses know how to find the perfect number of employees to manage the workload. A major mistake business owners make is hiring a team member for the smallest tasks as it’s a waste of money. If you’re a small business, then grow your team slowly and only when it’s necessary, such as around the holidays. 

Further, business owners should invest in employee training to keep their team satisfied. Note, employee turnover is costly, from lost productivity to time wasted, so show your appreciation to your team regularly.

4. Relying on Loans

Business owners often make the mistake of relying on loans, which results in huge financial losses.

Having one as a startup is understandable, but if you’re relying on multiple loans then rethink your plan. Most loans generate interest and you’ll end up spending ages repaying them when you could be turning a profit.  

5. Failing to Automate 

If losing money isn’t an option, then automate your business. You could automate email newsletters, social media posts, and follow-ups, which will save you a huge chunk of time. Further, use deductions management to help you spot any potential issues and you’ll save a fortune. 

Avoid Financial Loss in Business Today

Hopefully, you’ll use these tips to prevent financial loss in business. 

Make sure you regularly track expenses, harness the power of free marketing, and choose the perfect amount of staff for your organization. You should also avoid relying on loans and automate tedious tasks as it’ll boost productivity. Good luck with your venture!  

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