Your company is there to earn money—not lose it. Even if you’re not in the negative, it’s possible that cash is slipping through your fingers without you realizing it. You don’t notice the money leak because the problems that cause it aren’t in your face. For example, if you have a rude employee, he/she isn’t going to act that way around you because you’re the boss. It will happen when you’re not watching. Be aware of these five common reasons companies lose money to grab hold of cash that’s slipping away:
#1 A Bad Receptionist
Business owners often forget to check on their receptionists to make sure they’re remaining polite to customers and doing their job in a timely manner. If you have a receptionist that’s rude, puts people on hold too long, or has a habit that turns off potential customers, then you’re losing money at the front desk. The receptionist is often in charge of your business’s first impression, so you should routinely check on them when least expected to see if they’re doing a good job or not.
#2 Spending Too Much on Web Development
While it’s important to have a good website for maximum conversions, you shouldn’t spend too much money on web development either. Have a basic understanding of everything your web developer says your website needs or recommends for your website. Ask yourself if each feature is really a need. It could just be a nice-to-have. Also ask the opinions of three web developers about what would be necessary for your website to get a better idea of whether or not you’re paying too much on web development.
#3 Forgetting to Take Time into Consideration
As an entrepreneur, time is your most valuable resource. No matter who you are or what you do or where you come from, everyone has 24 hours each day. Routinely question how wisely you’re spending time working on your business. Where is time being wasted? How can you make better use of your time? One example is morning commute. Instead of listening to music on the way to work, you could listen to a personal growth podcast. Or maybe you waste time on meeting with people you know you’re not going to do business with. Lost time is lost money, so make sure that you’re making the most of your time.
#4 Poor Accounting
If your accountant is slacking, then your company will lose money. You must determine what each client, order, or job is costing you in real dollars. Without good accounting, you won’t know how much money each project is generating or losing. You might cut a project that was going well for you and hold onto one that wastes your money. Therefore, you must hire an accountant who loves his job and is known for accuracy. You don’t want an accountant who cuts corners or hates his job.
#5 Wrong Pricing
Sometimes, the problem is wrong pricing of your product or service. It is either priced too high or too low. Evaluate your pricing again to determine if it’s really the best price for your target market. If you originally used value-based pricing to determine cost, then try cost-based pricing this time. Or research your target audience more to figure out how much they’re willing to pay for your particular product or service, and adjust your value-based pricing accordingly. If you initially used cost-based pricing, look at your product from the value-based pricing angle.
In order to earn as much money as you can with your company, you must check for money leaks every once in a while. Common reasons a company loses money include a bad receptionist, unnecessary web development, failing to take time into consideration, poor accounting, and wrong pricing.
Contact us for expert advice on why your company is losing money or help with detecting money leaks to save time on searching for it on your own.