Cashflow is crucial to running a successful business. Being able to budget and forecast expenses while needing to have enough money to pay suppliers and wages can be difficult when you’re a start-up. According to studies by the University of Technology Sydney, 1 in 3 new businesses will fail in the first year of operation. The most common reason for this is a lack of capital or funding.
There are five expenses that most businesses owners don’t even realise are draining their bank account. Familiarise yourself with them so you can make changes to avoid ending up in debt—or even worse—going into liquidation.
Your Office Space
It’s nice to have an office that resembles Google HQ, so clients are wowed and staff love coming into the office, but renting an office space costs a fortune. If COVID-19 has taught us anything, we have the technology for employees to work from home. According to one study cited by Business News Daily, remote employees work 1.4 more days per month than their office-based counterparts, resulting in more than three additional weeks of work per year. So, there’s no reason why you couldn’t forgo leasing a commercial space.
If you really need to see your employees face to face, hire a collaborative workspace that provides you with boardroom facilities one day every month. Most of these collaborative workspaces have meeting rooms you can book for client meetings, not to mention drinks on tap.
Doing Your Own Accounting
When it comes to business, some things are better left to the experts – accounting is one of them. If your background is not in accounting, you could be missing out on valuable tax-saving strategies. It’s time to invest in your business and pay for an accountant who can manage your payroll and bookkeeping and/or outsource to a CFO to make sure your long-term cash flow is sustainable.
Growing Too Big Too Fast
When sales are starting to pick up, it can be tempting to hire new staff members and invest in new technology, but it’s important to make sure you can afford them. If you have a CFO onboard, they can help you ascertain how many staff you can afford to employ. But in the interim, if you can’t do everything yourself, try outsourcing. Contractors will invoice based on their hours, there’s no super to pay, sick or annual leave. In addition, contractors generally provide their own office equipment.
You get a job! You get a Job! Everyone gets a job!
In addition to over-hiring, giving jobs to almost anyone who shows interest in working for your company can be to your detriment. Not all employees are created equal. If you advertise for an employee and none of them meet your criteria, it’s worth your time to keep looking. It’s better to hire the right person, with stickability and a good fit for the team, than someone who just wants a job for the money and will probably just move on as soon as something better crops up. Having a high turnover of staff drains your bank account and your time. Not only do you have to conduct interviews, but there’s also time spent re-training. As well all know, time is money!
It’s nice to be able to shout the team morning coffees or lunch once a week, or taking clients out to be wined and dined, but extravagant business perks are draining your bank account. If you want to show your appreciation for the team, ask them what they’d prefer. It’s most likely they’ll opt for cash rewards, such as gift cards to their favourite retailer, Christmas bonuses or a pay rise.
If you’re already in business and struggling every week worrying about how you’re going to meet your financial commitments, talk to a business expert. They’ll be able to help you find where you’re haemorrhaging money and use strategic solutions that will save you time and money.