Small business owners are always on the lookout for ways to increase their bottom line. Many times, profits for small businesses are negatively affected by issues to which they pay little attention. By properly addressing the following money wasters, you can increase your income as a small business owner.
Business owners lose a large amount of money each year due to unnecessary use of energy. According to this article, “vampire energy is costing Americans $19 billion in electricity every year. Vampire energy can be hard to control, but essentially it is the charge that many electronic devices take while they are in sleep or standby mode.
Ultimately most of this is pure wasteful as it rarely benefits the consumer to keep these things in standby mode, but it’s the default setting.” This waste is bad for both your company and the environment. The good news is that there are a number of concrete ways to directly address this issue. Here are a few suggestions:
- Turn off laptops, desktop computers, and other plug-in appliances when not in use
- Unplug all appliances and equipment when leaving for the day
- Exchange incandescent light bulbs for bulbs that use fluorescent light
- Purchase office supplies that are energy efficient
- Recycle products
- Utilize the light from the sun
Not Maintaining the Building
Another crucial consideration to the bottom line of your business is the proper maintenance of the property. A major focus of this effort should be making sure your HVAC system is always in optimal condition. When an HVAC system stops working on a day with extreme hot or cold temperatures, it can become a costly expense that must be addressed immediately. The productivity of your employees will also suffer for as long as the working environment is uncomfortable.
Cleaning and upkeep of hard to see or hard to reach areas is also critical to prevent future problems. Seers Group explains, “cleaning your gutters might not seem like a crucial consideration, but it’s important to do it at least once a year. Not only do clogged up gutters look unsightly, but they can also cause damage to your premises – if water is unable to leave via the gutter, it may seep into the building instead, potentially leading to damp and other problems.”
Many business owners still do not understand the cost of losing current employees and replacing them with new hires. A recent study indicates that the cost of a lost employee can be as high as twice the annual amount of pay for the employee. People Keep explains, “Many times to replace a salaried employee, it costs 6 to 9 months’ salary to replace them. For example, a manager making $40,000 a year costs around $20,000 to $30,000 in recruiting, training, and other expenses. These costs go up exponentially in a specialized field or position.”
Another study found that the loss of an employee is worth from six to nine months of salary for the employee. So, replacing a manager who was being paid $50,000 yearly would represent losses from $25,000 to $37,500. The cost includes the search for another employee, the qualification process, and the time it takes to properly train the new hire.
Unnoticed Service Fees
The age of technology provides small business owners with many tools to support daily business operations. It is sometimes difficult to resist these tools and services, but it’s necessary to pay attention to your business coffers.
It is important to track the use and productivity of apps and tech tools to determine if they are helpful enough to justify the expense. It is very easy to forget about these seemingly minimal expenses.
Business owners should set aside one day each month to analyze all expenses charged to their company. This will provide you with an accurate view of how this accumulation of expenses is affecting the profitability of your business.
Your customers play an important role in the success of your business. To maintain customer loyalty, it’s important that you communicate with them as effectively as possible. BlytzPay explains, “Communicating with your customers (and enabling them to communicate with you) is a business basic. Keeping your brand in their thoughts, your sales and promotions in their back pocket, and being at their beck and call for any comment, question, or concern is exactly what customers want these days.” For that reason, it’s important for businesses to go beyond direct mail marketing efforts and speak to customers through their preferred messaging channel — their phones.
Small business owners will often attempt to do their own accounting, especially when there are budget concerns. However, bookkeeping is a complex process and should be left to a professional when possible. The tax savings alone can amount to thousands of dollars in savings for your business. This article explains, “it’s not only small companies or organizations that struggle with bookkeeping. One inquiry into the city of Philadelphia’s government spending found $924 million in bookkeeping errors. Many of these have to do with lack of control over the funds.”
A professional bookkeeper understands all the deduction available to you regarding tax filings and the business designation that best suits your needs and can counsel you on money-saving ideas that you may not be aware of.
A disorganized business environment will slow productivity and increase money leakage. A 2010 study showed that employees use a full week of work time each year searching for lost items. Furthermore, $177 million in lost productivity annually can be blamed on disorganized workplaces. HR Acuity continues, “57% of workers directly attributed desk organization to productivity levels, with nearly half of respondents claiming to be “appalled” by a teammate’s desk. It was also found that people with messy desks can’t concentrate as much. All that extraneous stimuli stifles the brain’s ability to process information.”
Keeping an organized workplace should be a priority. When work is slow, it is a great time to improve the organization of the office. Make sure that supplies and equipment are stored in a logical manner.
The effort of you and your employees should be just as organized. It is a good idea to begin each day organizing the day’s priorities. Make sure to identify the tasks that must be accomplished for the day.
It is important for small business owners to remain vigilant in their fight against money leakage. Many issues that drain profits from a business are sometimes not at the forefront of an owner’s minds. Business owners should pay close attention to the six issues above to protect the profits of their companies.