Business and money go together like, well, business and money. One can’t exist without the other. There’s so many decisions to make when it comes with the finances, it’s easy to go too left or…too right. So today, I’ve compiled my thoughts on things you shouldn’t spend your money on in business.
1. Too Many Subscriptions
Did you know Australian’s are wasting $4b on unused subscriptions?
Yeah, it’s alarming. Those $10 subscription fees here and there can add up. So if you do anything for your finances this new year, start with this.
It’s one of the first steps I take when looking into a new clients account. More often than not, we wipe $100 off their monthly expenses straight up. That’s $1200 a year!
Do you really need Netflix *and* Stan? Are you paying for a social media scheduling tool you don’t use? What about stock photography, the wrong level of accounting software or editing tools?
Audit your subscription use and cut it down where you can. Don’t buy all the ‘shiny objects’ 😉
2. Monthly Fees
Do you know when you buy something and you get an option of paying for it upfront or breaking the payments up? ALWAYS choose upfront payment. AfterPay and payment schemes are laden with hidden fees and extra costs.
Better cashflow management and you’re only spending if you have it saved/planned for.
While I’m at it, late fees can be anywhere from 5% to 10% of the total cost of a product or service. So, make sure you are paying your bills on time. Those $$$ really add up.
Are you setup with lots of bank accounts where you put profit, tax, operating expenses etc aside? Make sure you’re using them for what they’re designed and not paying exorbitant bank fees on each account, 5 accounts, $10/month, that’s $600!
I have a freebie in the Numbers Club on bank accounts and processes.
3. Too much inventory
If you’re a product based business, inventory management and forecasting is arguably the largest (and trickiest) part of your job. If you go all out and purchase too much product, you might just be left with it.
And, what does every business do with leftover stock? Discount it! Everytime you discount, you are losing money off your bottom line.
Instead, order what you need and if you run out, give your customers a chance to pre-order it in advance. That way your $$$ are covered.
Make sure you’re using the best suited inventory tracking system so you can reorder based on some amazing insight from previous sales.
4. BIG Marketing Costs
This is a grey area because you can’t make money without spending money on marketing. True. But, going full-hog with a $25k social media agency per year before you’re ready can really eat into your success.
Start small and build up when your business starts making bank. Maybe hire a VA to do some of your admin while you DIY your marketing. Or, get a specialised freelancer to get your marketing off to a good start.
It’s tempting to spend on all of it; creative, SEO, web design, social media advertising and copywriting but, choose one thing and grow from there.
Some agencies (like the fab Birdcage Marketing) pre qualify you over a discovery chat to make sure you’re at a good point to start handing it over.
5. Taking all the money out
This is a super complex topic I just wanted to touch on and will cover more down the track as it really is different for everyone. Don’t get caught up in the excitement of how much sales or profit you’ve made and take it all back out of the business in drawings (if you’re a sole trader) or wages (for other structures). By all means take what you need, but first work that out. How much do you need to save for GST/Taxes. What profit do you want to make. Are you looking to/need to reinvest funds.
I highly recommend having a chat to your friendly BAS Agent if you’re not sure where you’re at. Who will refer you to a Tax Agent if you need some personal tax planning help. Because you are in business to make money for yourself so you need to make sure you’re seeing the benefit and taking money out as soon as you can $$$!
I see far too many businesses struggle because there is no money in their business accounts and they just can’t get back on track.
The trick is forecasting your income and ensuring your expenses don’t exceed it, and not dishing out the cashola on things you shouldn’t spend your money on! Everyone’s business set-up is different so, financial strategy should follow suit. If you need a hand assessing what you should spend, when, feel free to book a discovery call. I’d be happy to look at your books and provide you with some fancy reports to help you make informed decisions.