Looking after business finances is not much different than looking after your own household budget. You have to try and keep a tight hold on the money. At the end of the day, your business profitability will probably be down to how economical you can be. It is not always easy to expand your business, find new customers and markets to sell more products. However, you always have control on your costs up to a point. Here are top ten money mistakes businesses make.
1. Not Shopping around for the Best Supplies
Companies build relations with certain suppliers over time. If you are not careful you may get too comfortable with them and not make sure you are getting the best deal. You should always seek for the best supplies that are competitively priced and delivered in time. This applies to utilities providers as well. These days it is easy to change your electricity or gas suppliers.
2. Not Finding the Best Bank to Work with
Banks are not just places where you keep your money. They offer countless products like credit card payment systems, insurance, loans, mortgages and overdraft facilities. Of course they do everything for a fee or interest charge. Not only should you be looking for the lowest fees and interests but also willingness to work with you. Remember that you build a history with a bank. It will all be wasted if they are not willing to help you out with financing when a great opportunity comes knocking.
3. Not Getting the Best Finance Deals
Just like getting a residential mortgage and refinancing when you find a better deal you should be looking to achieve the best finance deals for your firm. Many companies keep large sums of money in the bank to pay for wages and running costs. Also firms like solicitors and insurance brokers keep large sums of customers’ money. You should be able to get a good interest for them.
4. Not Supervising the Employees Well
Employees are the engine of a business. If they are supervised well they will work tirelessly for the success of their employers. On the other hand, they will stand around idly if they are not managed well. A good manager would need to work out how much each employee can do and try to line up another job as soon as one finishes.
5. Not Training Staff Well
Poorly trained employees let the business down. It is easy to point fingers and blame someone. Some managers think that they can do it because they are in charge. Being in charge means that you are responsible for everyone and everything within your premises. You have to make sure that everyone is doing the most suitable jobs for their skills and they are trained to maximize their potentials.
6. Not Having Good Stock Control
Waste is the worst thing in a business or household. It is like leaving the taps open overnight. It is pointless and you should try to avoid it. You should make sure that your staff only takes out what they need and they put back what is left. A good stock rotation prevents perishing of material too.
7. Not Insuring Your Business and Assets properly
There are several aspects to insuring your business properly. First of all, you have to make sure that you have sufficient employees and public liability. Depending on your business you will need professional indemnity insurance as well. The next step is to make sure your assets like buildings are insured as well as machinery, raw stock and finish stock. You shouldn’t forget about business vehicle insurance too. These insurance policies protect your business against unexpected losses and large liabilities claims from customers, public and employees.
8. Not Making Timely Investments for the Future of the Firm
You need to invest some of the money back into your business so that it can remain productive and competitive. You need to research for the new machinery and check what your competitors are doing. You need to consider your infrastructure needs as well. Many companies see the changes that need to be done but delay in acting on them. Then, they end up paying more money or getting caught in the worst time ever to make the changes.
9. Not Preparing an Alternative Management Team
It is always risky and costly to hire top level management from outside. They may not understand your company workings or take time to adapt to them. Therefore, junior level managers should be given more responsibilities to prepare them for the top jobs when they are available.
10. Not Considering Outside Contractors or Providers
At times the wisest thing to do may be to hire an outside contractor or get certain parts made outside. This could work out a lot cheaper and solve many issues in the short and long term. It may be old school trying to have a tight control over everything and getting everything done in house. You need to know what to keep in and what to get done outside.