Wasted Money: 7 Key Areas to Target for Bigger Profit Boosts

Last Updated on September 18, 2024 by Prissila Murillo

If the figures just aren’t adding up, or you need to reign things in and cut costs, understanding every single aspect of your business—what it does, what it costs you, and whether or not it’s making money—is likely the way to get things to where you need them. Every business owner knows that the number one reason for business failure is poor cash flow and bad finances, especially when you’re not making money or there’s wasted money piling up. It’s a slippery slope that could lead to your downfall. However, by identifying these areas of wasted money, you’re not just preventing failure but paving the way for growth and success.

But it’s not as simple as avoiding certain operations or cutting purchases. You need to determine exactly what is necessary to operate efficiently, without cutting corners, yet still trimming the fat.

You need to break things down department by department, function by function, and conduct a comprehensive assessment. What are you doing now? Can it be done more effectively? Can you make any savings? This diligent and thorough approach is critical to identifying areas for improvement and cutting wasted money.

However, these business areas are some of the most common ways you could lose money and are worth investigating first.

Identifying the Hidden Sources of Wasted Money in Your Business

Fleet Management

Or lack thereof, as the case may be. If you have a fleet, and you’re still not implementing fleet management software, then you’re simply throwing money away. For instance, from drivers not filling in timesheets correctly to poor driver behaviors, such as speeding or idling, leading to increased repairs, inefficient fueling options, and more, you could be burning through cash like no one’s business (well, actually, like yours).

It’s not just as easy as implementing fleet management software. You need to know the best practices for controlling costs and changing your approach to your fleet to reduce costs without limiting your potential. These Corporate Fleet Management: Implementation Best Practices This can help you understand where you might be losing money, the best ways to make changes, and, most importantly, streamline what you do so you’re not throwing vital cash away on the roads.

Marketing

Casting your net far and wide might seem like the best way to get results, but it’s highly likely you’re throwing money into the wind and just hoping it blows back in your direction. Sadly, marketing isn’t a boomerang action, and money isn’t guaranteed to flow back in your direction when you’re throwing it out there in your marketing efforts. It’s highly like you’re wasting vital funds because you don’t have a more specific and considered approach.

While it might seem counterproductive to limit who you market to and how, it’s quality, not quantity, you are going for when it comes to marketing. By determining your audience, their interest demographics, and what messaging and services or products will appeal to them, you can take a strategic approach to your marketing. So, if you currently have a blanket approach to marketing in which you’re covering all your bases. Stop. Be strategic and see how much more successful it can be. This approach will empower you and put you in control of your marketing efforts.

Enforcing In-Office Rules

While the majority of businesses are enforcing a “back to the office” mandate for all employees post-COVID lockdowns, it might be worth assessing if you need an office. Are you keeping up the office culture simply because that is the done thing or because you need everyone there? While not all businesses can operate partially or fully remotely, if you are able to offer this, it can be a great way to cut down on expenses. From renting your office space, hiring equipment, paying utilities, insurance, and so on, the costs of having employees in an office for a job they can carry out at home seem like a waste of money, don’t you think?

Look at how you can implement flexible or fully remote working and how the company performs during trial periods to ensure productivity and standards are still met at home and consider the pros and cons of downsizing or eliminating the office entirely if you don’t need it. If you all need to meet up in person, hiring a conference room or a temporary working space can be a great alternative or a temporary working space for a few days or weeks when needed.

Not Outsourcing Efficiently

Do you fully understand what you’re paying for when outsourcing, and it is meeting your needs? It’s crucial to be informed and knowledgeable about the outsourcing service you’re using. On the surface, the package you’re paying for, or indeed packages if you’re outsourcing more than one area, might seem like they offer you what you need if you’re paying for features you’re not using, are they really right for you? It might be that when you agreed to the service and support, it met your needs, but over time, you’ve grown and expanded, and it doesn’t do everything you need to mean you’re paying for something that isn’t effective. Don’t be afraid to talk to your outsourcing partners and discuss how the service is and isn’t meeting your needs and how it can be improved so you get the maximum benefits and value.

If they can meet your requirements, that’s amazing. If not, it might be time to look at ending the contract and going elsewhere for something that is doing what you need it to and is wasting your money.

Not Automating

If you have essential but time-consuming or mundane tasks or operations that need to be performed regularly, not automating them and instead having them done manually is likely costing you thousands per year. Look at the time it takes your team to get through these ongoing repetitive activities each day, add up what you’re paying them to do, and see how much money you could save by automating this instead.

Automating these tasks not only saves you money but also frees up employees’ time, allowing you to utilize your team where they are needed to do more important tasks to facilitate growth and meet demands.

In addition to saving you money, you can free up employees’ time and put your wages bill to good use by utilizing your team where they are needed to do more important tasks to facilitate growth and meet demands.

Popular tasks businesses automate include;

• Marketing
• Sales
• Inventory management
• Onboarding
• Accounts
• Reporting
• Workforce management

When evaluating tasks to automate, a good rule of thumb is to look for ones with a clearly defined process: repetitive, standardized, measurable, and rule-based.

Copying The Competition

Are you guilty of this? Be honest with yourself. If you’re doing something or using certain tools or processes simply because someone else is doing it, and you think it’s going to help you, then stop.

You need to be spending your money on things that benefit you, not tools other people use, with no understanding of how they can help you. This can be grouped in with competing with other businesses if you’re not at the same point as you are. If you’re throwing money at trying to be bigger and better than competitors without having the substance to back it up, then it’s only going to be wasting your finances.

Instead of copying what they are doing or using tools they’re using, look a bit deeper. What is it they’re gaining from the software or resources they’re using, and how can you get these benefits for your business? What can you offer that they don’t need that makes you stand out? These are all better uses of your resources than copying them by doing something because you think you should never return the best results.

Employees

There are multiple ways you can lose money via your employee.

Firstly, hiring the wrong people can be really expensive, as there is a high turnover rate. You need to keep rehiring new employees and getting the training in place to ensure they can get the job done. This could be because you are not honest about what the job entails, the job doesn’t meet expectations, or you have a poor employee work culture. Or it could be because you’re not thoroughly checking their credentials prior to hiring and are being swayed by the wrong factors when it comes to what you’re looking for when hiring.

It might be that you are using recruitment agencies to hire employees when there are other viable and more cost-effective methods of finding and retaining your team.

Or it could be that you consistently remain under or overstaffed, resulting in excessive wage bills because you are constantly covering employee shifts or paying people you don’t need to be paying.

The solution will depend on the issue you are having with your employees, but stepping back and looking at all aspects of your employment, from hiring to onboarding, training, wages, compensation, culture, benefits, etc., can alert you to what is going wrong so you can rectify it and ultimately save money or get the most from your wage bill.