What Small Businesses Waste Money On

Small businesses sometimes fall into the trap of spending money they don’t have on things they don’t need. This isn’t going to be a “buy less coffee” type of post. We’re here to tell you what services you’re actively spending money on when you shouldn’t be. 

Looking Big

The biggest way a small business blows their money is by trying to look big. As a small business, your direct competition is the other small businesses in your area, especially those in your industry that you’re directly competing against. While you’re indirectly competing with bigger companies that offer similar services, you don’t need to worry about matching their spending. Their marketing goals are far different from your marketing goals. Larger companies are able to focus their efforts on large scale branding that might not directly generate them leads. As a small business, your goal should focus mostly on direct lead generation and customer experience. Try to make each dollar you spend on marketing count right from the get go. 

Death By 1,000 Fees

Small businesses may think that their technology can do no wrong. Technology is fantastic in business and can help make everyday tasks way easier. The downside is that when you’re paying for dozens of different tech services, you may have overlap or fees that you don’t need to pay. Try consolidating the services you use into the least amount of different companies possible. Most companies have bundles that will allow you to combine services cheaper. 

It’s also a good idea to see if there are any free or open source alternatives to the services you currently use. If you’re only managing one social media account, for example, you don’t need a paid scheduling tool for your posts. Most social media sites have built in scheduling tools that work just as well for small businesses.

I’ve evaluated countless technology, marketing, and IT services. I frequently see companies buying into services they don’t understand. Having an employee or third party with experience in the area to guide you is invaluable for these situations. 

Spending Money To Make Money

I’m sure everyone’s heard the old saying “You need to spend money to make money.” Well, this is true. But you also need to manage your spending to make sure you’re actually making money. If you hire a new accountant for 3 times as much as your last accountant, he’d better be saving you 3 times the money. 

For example, let’s say spending $100 on a full page newspaper ad will make you $80 in return. Spending $100 running social media ads will make you $120 in return. With this information, it’s obvious that you’d run the social media ads. You won’t know your exact return on your spending in practice though. Finding out which marketing methods work best for your company can take some trial and error. Set aside a budget, test different marketing methods, and check what your return is. The key is focusing on the outcome and readjusting to make the most of your budget.  

Lack Of Automation

I know I just said that technology can cause you to overspend, but technology can be a massive boon if used correctly. If you’re paying $10 a month for an automated service that saves you more than an hour of time every month, you’re probably saving money by having the service. It won’t directly show up in your monthly statements, but an automated service that saves you time lets you make more sales or handle more tasks, improving productivity. 

At J&R Marketing, we use a tool called Asana to manage our projects. It helps us stay on track and organized between departments. We also use Zoho CRM as our job and client management tool. It allows our employees to have access to our current jobs and leave notes for other employees. Tools like these improve our productivity and workflow, allowing us to maximize the amount of clients we help. 

Things That Don’t Help The Business

This is mildly subjective, but things that don’t help the business should be low priority on the purchase list. If your company is struggling for money, buying a new ping pong table for your company culture probably isn’t the smartest spending. It helps to make a list of items you want and need, then you can categorize that into high and low priorities. If you feel that a ping pong table is integral to your employee morale, keep it on the list and in the low priority zone. An item like a new laptop because the one you have can’t handle your workload is a high priority item. 

It’s important to take time to audit your business spending every few months. Regular audits of your own business to see where you’re spending money unnecessarily. 

Taking a step back and reviewing your business spending can help trim the fat from your business. Don’t waste money on automated tools that don’t improve productivity. Don’t overspend on marketing that doesn’t offer a return. Generally, don’t spend money on things that don’t directly help the business. If you’re looking for more marketing and productivity articles, check out my other blogs here. Reach out to me here for small business advice.