Owning a small business isn’t for the faint of heart.
With all the ins and outs of running your enterprise, small operational costs can often go untracked. When added together, these costs can make up an unusually large percentage of lost revenue. And for small-scale businesses, it’s important to make sure that every dollar is accounted for.
Here are five little-known ways that your company loses money, coupled with suggestions to keep it in your coffers.
1. Incongruity between departments
When different components of a business do not work harmoniously, the owner pays for it. Ensuring communication between different departments of a company is key to running a business from the top down. Departmental tasks and responsibilities need to be clearly defined and information about projects and updates needs to be accessible for all employees. By eliminating company disorganization, you can preemptively avoid many organizational hazards, such as unfinished assignments and unnecessary allocations of time and money.
2. Overlooking the little things
In a typical business day, it can be hard to give everything its necessary amount of attention But a lack of focus on minor details could cost not only your business, but also your clients.. When dealing with client requests, it is important to focus on the task at hand. Read, reread and clarify what they require.
3. Keeping up with scope creep
Sure, it may sound like a Radiohead song, but it’s a real business term, which simply means going over budget on a client project, or facing uncontrollable changes or continuous, unplanned growth in its scope. To prevent this, be sure to distinctly define and document exactly what is requested and outline a process with the client for how to proceed if it happens..
4. Not calculating soft costs into ROI
ROI (return on investment) is a performance measure used to evaluate the efficiency of an investment, or to compare the efficiency of a number of different investments. When calculating an ROI, it’s important to include your time as a “soft cost” – a cost that is not directly related to hard goods or construction – so that you can ensure a benefit for your investment in a project.
5. Failure to make calculated decisions
When running a small business, it’s important to plan for the future, and not just make day-to-day decisions on tasks. By developing a business strategy, you can lay out your desired long-term achievements — and hopefully avoid meaningless tasks. Growth takes planning, and if you’re only spending money on short-term tactics, it’s tougher to get ahead.
Now it’s time to put that cash back in your pocket and look forward to the future of taking your business to the next level.