Nobody wants to see their dream go up in flames, but that’s precisely what can happen to small business owners who burn money on unnecessary expenses.
In this article, we go over 5 big ways small businesses waste money so you can avoid making these costly mistakes.
1. Office Space
We get it; having an office space makes everything feel legit. But in most cases, it isn’t actually necessary.
Now that most everything is available online, you can actually conduct business from the comfort of your own home and save a ton of money in the process. That’s what many of our e-commerce clients do and their businesses are thriving! Even if you have employees, technology has evolved to the point where you can have a remote workforce.
Are there still industries in which having an office space is necessary? Absolutely. But after the COVID-19 shutdowns, many business owners found that they were able to adapt to a virtual business model.
2. Top-of-the-Line Technology
Unless you’re running a tech company, chances are, you don’t need the latest and greatest in electronic equipment. In fact, it will serve you well to know that the average computer user will only use a fraction of the features available on their device.
Instead of spending a fortune on brand new top-of-the-line technology, a better option is to purchase either slightly older equipment or refurbished products. Newegg Insider defines “refurbished” as any “product that has been returned, inspected, repaired if necessary, and then resold. In the case of refurbished computers and mobile devices, the device also has its data wiped and is restored back to factory settings.” In other words, buying refurbished can get you a like-new computer for a fraction of the cost.
3. Business Trips
Now that video conference platforms like Zoom have made it possible to conduct business meetings online, it’s seldom necessary to go on business trips. And yet, many small businesses still splurge on travel-related expenses because they’re clinging to an outdated notion of how “proper” business should be conducted. In this case, all that’s really needed is a modern shift in perspective, as video conferences can save you hundreds on flights, hotels, and other travel-related costs.
Many small business owners choose to do their own taxes because they think they’ll be saving money by not hiring a professional. However, in the long run they end up costing themselves more money for the following reasons:
- They overpay by not taking advantage of tax breaks
- They make mistakes that the IRS penalizes them for
- They spend an exorbitant amount of time on a task a professional can do in just a fraction of the time
If you don’t have a background in accounting, do yourself a favor and hire a professional from the get go.
5. Memberships & Subscriptions
When you’re just starting out, it’s easy to get sold on various memberships and subscriptions, some of which you’ll use but most of which will become irrelevant over time. And while each may only amount to a small price—$10/mo here, a $300 annual membership there—it adds up.
The solution? Make a list of each membership or service you are subscribed to. Then, evaluate how often you currently use each membership or service; not how often you anticipate using them in the future. If, in fact, you do use these memberships and subscriptions quite often, try to put a dollar value on your return on investment. If it doesn’t make financial sense to keep paying for it, then cancel it. You can always re-up later.
If you found this article helpful and informative, make sure to pay it forward by sharing it with other entrepreneurs. It may cost you a few minutes of your time, but it may save someone else a good chunk of money.