Running a business means having expenses, and some of those expenses can be quite small. For instance, you might have a handful of expenses under $100 per month, or numerous, small, one-time expenses that come about once in a while. Likewise, if you’re not tracking opportunities for warranty reimbursements, you’re paying out of pocket for repairs that could save you thousands of dollars per year.
If you aren’t tracking all of your minor expenses, you’re losing more money than you think, and here’s why.
Small expenses add up quickly
Imagine paying ten bills every month that amount to $50 each. That’s a total of $500 per month, and although that may seem like just the cost of doing business, that’s a lot of money and it’s possible that you may not even need some of the things you’re paying for.
If you’re spending $500 per month, that’s $6,000 per year or $60,000 over a decade. It’s important to make sure your small monthly expenses are necessary, and the best way to do that is by tracking everything.
Businesses notoriously pay for software they don’t use
Do you know what all of your monthly expenses are for? Are you paying for software you don’t use? Are you paying extra each month for “seats” or “users” that aren’t currently being used? If you aren’t sure, it’s worth finding out as fast as possible just in case you’re paying for more than what you’re using.
For example, most reputable email marketing software applications allow account holders to buy extra “seats” to ensure employees have their own account credentials. If you’ve downsized your team, you might be able to get rid of the seats that aren’t in use. You can always add them back later if needed.
The software subscription model is the new normal and many business owners don’t realize just how much they’re spending on subscriptions every year. When you sign up for applications one by one, it’s easy to end up with a handful of them and not even consider the cumulative cost. Sometimes business owners sign up for free trials and forget to cancel, and don’t even notice when the billing cycle hits again.
The biggest money-waster is when there’s overlap between applications. For instance, you might sign up for a shopping cart system, email marketing program, and split testing software a-la-carte, and spend more money than you would if you chose a program that provides all of those features.
The best thing you can do is reevaluate your software subscriptions and make sure you can tie each of them to some kind of ROI, even if it isn’t financial. For instance, task management software helps keep teams on task and productive, which is absolutely essential to business. However, if you’ve signed up for an AI image generator and you don’t use the images you create, you can probably cut it loose.
Turn over workers who don’t perform
Keeping employees on staff who aren’t performing is a major source of wasted money. And it’s not just employees who underperform. It’s also the ones who show up, clock in, do the bare minimum, and clock out. You want a team of people who are excited about doing their job every day, people who are eager to get results because they’re passionate about what they do for your company.
If you have a team of people who seem like they have to drag themselves into work every day, you may want to consider cutting them loose and replacing them with people who are more enthusiastic.
Spend more money to acquire your customers
Managing marketing spend can be tricky because sometimes the least cost-effective method produces the most conversions and revenue. For example, it’s common for businesses to select a marketing strategy that has the lowest cost to acquire a customer.
The problem with this approach is that more often than not, the more you pay to acquire a customer, the more that customer is worth long-term. If you try to spend as little as possible to get your leads, you’re going to miss out on a much higher lifetime customer value.
Marketing legend Dan Kennedy always says, “Whoever can spend the most money to acquire a customer wins,” and it’s true. The more you invest in getting your ideal customers, the more valuable they are to your business.
Track and trim regularly
Ultimately, you’ll be in a better position when you track your small expenses and trim the ones you don’t need. Over time, these habits will help you save more money you can use to invest in more important aspects of growing your business.
