Small business owners have a lot of things to deal with and, even with a great business idea and solid business plan, it’s easy to lose track of finances and overspend. However, if you are not aware of what you have coming in versus what you have going out, your business is likely to suffer. Unfortunately, in most cases, owners are unaware of the problem until it’s too late.
If your small business is located in Southeast Wisconsin, consider hiring Nolan Accounting to keep track of your finances. We offer an array of financial services, including accounting, bookkeeping, payroll, tax prep, and more. We can help you keep your expenses under control so that your small business will not only survive but thrive.
In this article, we’ll explain a few of the areas where small businesses often overspend.
Top 7 Areas of Overspending
There are several areas where small businesses often overspend. The top 7 are listed here:
Often, small business owners get wrapped up in their marketing strategy without considering their bottom line. No matter what methods you are using to market your business (social media, sponsorships, etc), it’s easy to spend too much on advertising.
The best way to avoid this is to be strategic. For example, if you are a local small business, you may find it helpful to partner with influencers in the community. On the other hand, if your business is online, find out where your customers are coming from and only spend money on those areas.
Your office space says a lot about your business. Therefore, it’s obvious that you want to have the perfect office space from the start. Unfortunately, a professional office space isn’t within reach for most new businesses.
However, there are some ways that you can use your existing furniture to set up your space:
- Use what you have- don’t spend money buying new things every time you make a change
- Consider renting desks and office furniture
- Instead of trying to create the “perfect” work space, focus on making it comfortable
While things like online storage, Netflix and other streaming services, and gym memberships are fun- they may not be necessary, especially if you’re working with a shoestring budget.
Think about the short- and long-term needs of your business. Then, think about your subscriptions and make sure that they line up with your business goals. If there is something that you are not actively using, cancel it or at least downgrade the plan until you need it.
The best way to determine if you are purchasing unnecessary subscriptions or you have unused subscriptions, consider doing an audit. Look over your financials and see what you are spending each month including cell phone, utilities, internet, and more.
When you are just starting a business, it’s easy to get overly excited and overspend on supplies. This area includes office décor, entertainment gadgets, and other things you need to make your office feel like home.
Limit what you are spending on these each month. Put your focus on what is important for the company instead, including comfortable workplace essentials, marketing, and affordable printing options.
While it may not seem like much at the time, these costs do add up quickly month after month. When you put your focus on spending only on what you need, its easy to keep your spending under control.
In today’s world, small business owners want the latest tech to ensure that they remain relevant. However, if you are continuously buying the latest and greatest new devices, you’re likely spending more than you need to.
Therefore, instead of jumping on the bandwagon and purchasing the newest devices every time they are released, only buy what you absolutely need. You should only be spending money on upgrades if your current devices do not meet your needs and the newest offers a major advantage.
While it’s true that your business needs phone and internet access to maintain communications and carry out a variety of business functions, most small businesses overspend on this resource. Small business owners sign contracts that are hard to manage and have costs built in that they are unaware of until it’s too late.
Many small business owners find that they really don’t need the highest internet speed available and, reducing speed will often reduce the bill. Make sure that your phone and internet packages are in alignment with your business goals.
While employees are essential for many businesses, owners often find that they are paying more than they can afford on labor. This has a detrimental impact on the bottom line. Since that money is tied up in payroll, business owners are unable to invest in things that are important.
Therefore, take your time to research each position and find out what similar businesses in your area are paying. Then, set your wages accordingly. Make sure to include things like retirement plans and health insurance.
You may find that it’s better for your bottom line to hire freelancers instead of staff members. When hiring, take the time to weigh your options and understand the advantages and disadvantages of each one before deciding.
While you may have an amazing business idea and a solid business plan, if you are spending too much, you’re going to fail. Yes, it is true that you must spend money to make money- but if your expenditures are higher than your profits, you’re not going to succeed.
If you need help managing your Southeast Wisconsin small business finances, consider hiring Nolan Accounting. We can help you with all of your finances, including accounting, bookkeeping, payroll, tax prep, and so much more. Contact us today to learn more about how we can help you!