Many businesses often indulge in unnecessary or wasteful expenditure. Sometimes, they do not know this because they cannot identify the wastefulness.
This is even more important for small businesses and startup companies. In this article, we’ll be looking at and identifying some of the top business expenses that are unnecessary, yet are considered important by businesses.
Pricey Subscription-Based Services
Nowadays, many companies do much collaboration in the cloud. This means the use of expensive project management software or platforms when there are cheaper or even free, yet equally useful, software and platforms that they could have used.
So, go check your collaboration platform now. How much are you spending on using that platform every month and year? Are there cheaper alternatives that will work just as well and as efficiently? Do your research and then decide if the paid service is worth its cost.
Expensive Looking Office and Equipment
Why do you need expensive furniture when you can get your job done just as well in more Spartan surroundings? Why purchase new, high-end equipment and tools when you can find used ones that cost just a fraction of the new one?
For instance, at the early stages of the company’s growth, Chobani needed to expand the capacity of their yogurt filling machine. They could have bought a brand new one with increased capacity.
Instead, they found a way around that by retrofitting it and increasing its capacity from 20,000 units a week to 100,000 a week, all at a fraction of the cost of a new yogurt filling machine. The same goes for product barcodes or universal product codes.
Why spend so much money getting barcodes that you have to renew when you can get permanent UPC codes from an outside vendor like speedybarcodes.com? Be smart about expenses like these. Always look to see if there are cheaper alternatives that work just as well for your needs.
High-End Website Design
Yes, we know you want to make an impression. However, don’t do it at the detriment of other essential expenses. You do not need to spend $10,000+ on web design when you can get a decent design for $2,000-$3,000.
You can always redesign the website when the business starts generating boatloads of money. However, until then, spend the rest of that money on other more important business processes.
Hiring Staff too Quickly
Startups are particularly guilty of doing this. They hire staff in the hopes that they’ll be useful when the company starts growing. Don’t do this. Start small and hire as needed.
There will always be highly skilled and talented individuals available to work for you. So, don’t delude yourself into thinking your organization is experiencing some growth just because you have more employees than is necessary.
Office Parties and Expensive Lunch Meetings with Clients
How many of us have done this? No doubt, this is often done in a bid to impress the client or prospect and get them to either give us their business or buy more of our products.
However, the truth is expensive lunches and office parties may not seem like much at the beginning, but it can add up fast. Sure, they are fun, but they do not make sense from a financial point of view.
Unquantifiable Marketing and PR
When your organization is huge and generating billions of dollars in revenue, you can afford not to track and measure your marketing and PR. However, when you are a startup, every cent counts.
This is why you must always track your marketing and advertising to make sure they are delivering excellent ROI. If you cannot quantify the results of your marketing, stop that marketing immediately. There should be a direct link between new marketing efforts and increased revenue. It is that simple.
Fancy Stationery and Packaging
This is a definite no-no. The major mistake many businesses –particularly startups- do is to spend a small fortune on packaging and stationery when they can get by with something decent.
Instead of spending a small fortune on fancy packaging, why not just invest in decent looking packaging and spend the rest on perfecting your product. If your product is awesome, most people will not care about fancy packaging.
Finally, if your business is in its growing phase, do everything to produce and deliver top notch products and excellent service. If you do this consistently, your business will experience tremendous growth and success.
Author: Oscar King is a small business consultant who helps people make smarter business decisions to realize greater revenues. If you’re interested in learning more about Oscar, you can visit his profile on Google+.