Without cash, what is your business? When you start losing money, you could end up in serious danger of losing your company. There are a few red flags when you’re hemorrhaging money – it doesn’t just disappear, after all. If any of the following things apply to you and your business, you could be throwing money down the drain and putting an unnecessary strain on your finances.
You’re not tracking your expenditure
Outgoings such as utilities, payroll, office rental, and business rates are usually around the same, month in, month out. However, despite their stability, it’s common for businesses not to follow them. This makes it impossible to follow how much you’re spending, and therefore impossible to see the bigger financial picture. How can you know if you’re in profit or loss when you don’t even know how much is leaving your account each month? Keeping a close eye on expenditure will also alert you if anything’s amiss.
You’re drowning in credit card debt
If you have a business credit card, whatever you do, make sure it’s paid off by direct debit every single month. Credit card debt spells bad news, and chances are, once it starts it will just keep on growing. Nobody ever got rich on credit cards, and paying off the interest is a serious financial drain that your business just doesn’t need. If you’re in debt, make paying that off your number one priority by paying more than the bare minimum towards it each month.
You’re paying bills late
Late fees are dead money – they go out of your account for absolutely no reason other than the fact that you didn’t pay your invoices or bills on time, for whatever reason. This means, in the best case scenario you’re paying over the odds for your goods or utilities, but in worst case scenario, your accounts could be cut off, and you could be referred to a collection agency.
You don’t have an emergency fund
Whether it’s your business money or your personal account, it always pays to have a little bit of extra cash aside for a rainy day, or for when the servers blow up, and you need to fork out for a replacement. Rather than force yourself into debt, make sure you’ve always got a little bit set aside, just in case.
You’re not shopping around
Chances are, the first offer you get isn’t going to be the best offer. Negotiating and shopping around guarantees you the best deals, whether it’s for your business telephones, ensuring you get a great deal on your line rates and support, or your gas and electric supplier. If you’re accepting the first offer, you could be paying hundreds of pounds a year in cash that just doesn’t need spending.
You’re letting vanity get the most of you
When you spend too much time comparing your company to competitors, you can start to let vanity overtake your decisions. That means that you stop making sound investments, and start looking for the snazziest equipment instead. Just because your competitor has snazzy equipment, doesn’t mean their company is in a better financial situation. Focus on you and your customers, not them.
Keeping a close eye on your cash and understanding its fluctuations is the best way to stop the bleed.