There are thousands of budding entrepreneurs all across the country, trying to make ends meet in their small business or start up company. They have aspirations and dreams of creating big and successful businesses. However, for many, these dreams never turn into a reality. Instead, they’re stuck trying to keep their company afloat.
The harsh truth is that being a business owner is incredibly difficult in this day and age. Particularly if you’re new, and trying to build something from the ground up. Lots of people try, and lots of people fail. Normally, their failure is down to too much money leaving the company. When you’ve got lots of cashing going out, it makes it very hard to make a profit and stay alive.
But, how are small businesses losing so much money? What’s causing entrepreneurs so much financial distress that they end up having to close down? I took a closer look at things and found out some of the answers.
Employees
Most of the money ends up being paid out because of employees. Naturally, you have the usual staff costs. They require regular payment, and then there’re all the additional benefits to consider too. But, employees cost businesses millions of dollars in compensation claims. It’s not uncommon for a staff member to pick up a personal injury in the workplace. As noted on the Clay Burgess site, people can get injured due to slip and fall accidents. These accidents fall under something called ‘premise liability.’ And, it’s a law stating that business owners are responsible for their premises. If someone gets injured, it’s your fault, and you have to pay compensation. Sadly, too many small business owners don’t put enough emphasis on health and safety. So, staff is getting injured, and mini fortunes are being paid out.
Procurement
For a business to function, it needs a variety of supplies. These include essential goods that you can’t do without out. Normally, these are items that directly impact sales figures, etc. Then, you have secondary items that aren’t essential, but you still need. Things like office supplies or work uniforms. Little stuff here and there that soon adds up to a big cost. The problem is, people are spending too much on procuring their supplies. This is either down to reckless spending, or a poor business model. Small business owners need to know how to manage their spending and limit these costs.
Marketing
Believe it or not but loads of small companies are wasting money on marketing campaigns. Everyone knows it’s an important part of starting a business, but some people go overboard. They spend way too much and get poor results. There are loads of cost-effective marketing ideas out there; you don’t have to splash the cash.
After looking at some examples of failed businesses, these three things stood out as the biggest expenses. You’ll notice that all three aren’t avoidable, but you can still cut the costs. For employee spending, you could outsource a lot of work and save money. Shop around for cheaper supplies to reduce procurement costs. And, find cheap and effective marketing techniques.
