Hidden Causes Of Financial Loss In Your Business


Although fun and passion are essential in business, the one thing it’s all really about is making money. After all, if you don’t maintain a profitable bottom line, there won’t be a business to love and enjoy. That being said, business owners are incredibly busy people, so most of the time, it’s easy to get caught up with other things and fail to notice that your business is losing money left, right, and center. When you do realize, it can seem like cash is vanishing into thin air, but there are actually a variety of causes. Here are a few hidden ways your business may lose money.

Combined Bank Accounts

One of the very first things you should do when you start your business is open up its own separate bank account. If you don’t, you’ll have to keep your personal and business finances together, which could lead to overspending in either area. While this may not bother you too much when it comes to your own money, it will make it difficult to stick to a budget in business.

Unnecessary Office Space

Renting or buying your very own office space can make your business dream feel more like reality and show everyone around you that you’re serious about your company. That being said, you shouldn’t pay for this space unless you really need it. Instead, try working from home and telecommuting for a while. This saves you from other costs, like utilities and transport, too.

Regular Small Purchases

When you start to run low on paper or teabags in your office, the simple solution is sending out an employee with a business credit card to go and buy some. This will only cost you a small amount right now, but the more times you have to do it, the more money you’ll waste. Instead, you should regularly buy these items in bulk for a discount, saving money, as well as time.


Hiring Unnecessary Staff

Despite what the media wants you to believe, no business owner builds a company entirely on their own. With that in mind, there will come a time when you need to bring on someone to help you. That being said, this doesn’t necessarily mean a permanent staff member. Instead, it may be more appropriate to outsource work. This way, you won’t have to pay employee benefits.

High Employee Turnover

Once you do start to build up a permanent workforce, it’s vital that you do all that you can to keep them on your team. With advertisements, interviews, training, and more, the hiring process isn’t cheap, which means that high employee turnover can cost you massively. To remedy this, you should create a positive environment, as well as offer competitive salaries and benefits.

Using Outdated Technology

In the business world of today, most of our work is done using computers and other technology. Because of this, if something breaks down or starts to run less efficiently, it affects the entire company, wasting time and therefore money. Because of this, you need to ensure you use devices that can keep up with your demand. You should also invest in proper maintenance.

Theft Of Merchandise

Shoplifting is a major concern for any entrepreneur in the retail industry. You can read more here about the issue, but it’s safe to say that it costs companies a lot each year. There’s no way to eliminate this problem altogether, unfortunately, but you can reduce and prevent it with better security. You should also offer training to employees on how to deal with suspicious customers.

Wrongly Priced Stock

Whether you’re overcharging or undercharging your customers, pricing up your stock wrong can majorly impact your profit. To avoid this, you should conduct market research and consider the prices of similar products out there. It’s important that you remain competitive and affordable, but you should also charge high enough that you cover expenses and manage to make a profit.


Badly Executed Marketing

It doesn’t matter how innovative or useful your product is, no one is going to buy it if they don’t know that you exist. With that in mind, it’s crucial that you invest time and money into your marketing strategy. That being said, even this won’t help if your tactics are outdated or don’t target your audience. Researching your target market first can keep you from wasting cash.

Failure To Comply

The legal side of business can be incredibly confusing, but, as the owner, it’s your responsibility to ensure that your company keeps on the right side of the law. If you fail to comply with these laws and regulations, then you could see yourself paying a fine or much worse. Thankfully, you don’t have to handle this alone, as there is professional legal advice out there to help you out.

Wasting Company Time

When they say that time is money, they definitely aren’t wrong. In the business world, even a few wasted moments can cost you a fortune, which is why you need to learn to manage your time better. Instead of trying to handle everything yourself, you should stick to core tasks and delegate everything else. You should also minimize distractions so that you find it easier to focus on work.


Poor Financial Management

Unless you keep track of your money, there’s no way to see when you’re overspending or losing cash unnecessarily. With that in mind, you need to make sure that you stay on top of your accounting, by paying bills on time and regularly updating your budget. Unless you’re an expert in accounting, this can be confusing, which is why you may want to bring in a professional to help.

Without money, your business simply isn’t going to survive. While there are, of course, companies that have overcome financial hardships, there are so many more that go under because of them. If you want your business to stop losing money, then you need to keep an eye on what goes in and out. Hopefully, with the advice above, you’ll be able to reduce financial loss and keep your business running strong.

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