Research conducted by accounting software Xero confirms the worst. It says a delicate financial situation means around half of small business owners are worried about their futures:
- More than 7 in 10 have faced cash flow issues in the last 12 months alone
- Many bear the brunt of their business finance problems with sleepless nights, stress and increased anxiety
- 25% say they can’t pay their bills
- And did we mention that 41% stop paying themselves a salary to keep their business afloat?
It’s a tough and often lonely road. But even at the worst of times, there could be opportunities to reduce your expenditure and make savings. That begins with identifying hidden costs and pinpointing the easily overlooked things that could be draining your cash flow and causing your way more stress and hardship than is necessary.
Inefficient processes
They may not be a tangible expense which you can see disappearing from your bank account, but inefficiency without a doubt costs your business money. Think about it. If you’re paying someone £20 per hour, but they’re only actually working for 50% of that time, you’re wasting half of that money.
That’s not to say your team is lazy. But perhaps they currently have to spend a good chunk of their time on repetitive or time consuming tasks. That means they can’t work more efficiently as a result. Perhaps output is slowed down by machines that are often breaking down or running into problems. Or maybe the lay out of your warehouse or stock room means they spend more time than is needed running between one point or the other.
Whatever the reason, inefficient processes sap your business of business. They mean you’re spending more to do less. And missing opportunities to make more.
Not convinced? Some experts suggest that inefficient processes could be costing you as much as 30% of your annual review.
Read that again. 30%. That means almost a third of your time could essentially be wasted.
Poor employee retention
No matter what your business does, your team is your pathway to success. Those are the people who make the business of your business possible. They serve your customers, Make and package your products and are the faces your customers see. They’re vital to your success and day-to-day operations. So, what happens when you find it hard to hang on to staff members?
Even if you avoid using recruitment agencies, there is a huge cost involved in high employee churn. That’s because you still need to replace those who leave. In the meantime, productivity might decline – that means your revenue falls because your output is lower. You might need to place more pressure on remaining members of staff. That stresses them out and causes them to be less productive and might mean they consider leaving as well – that means your revenue falls.
When you do replace people, it will inevitably take your new hires some time to learn your processes and get up to speed in the role – that means you’re making less money. Not to mention, the quality of your work might suffer, your turnaround times could become longer, and your service may well be poorer. That results in unhappy clients, lost business and a decline in revenue.
You’re working in the business, not on it
All those extra hours you spend packing boxes, delivering shipments, doing payroll and generally keeping the wheels turning? You might be a hidden cost that’s impacting your business cash flow. We know that sounds harsh but, the reality is that you can’t be in two places and doing two roles at once.
All of the time you spend working in the business (essentially doing someone else’s job) is less time you spend working on the business (making sales, developing strategies and putting money making plans into action). For your business to reach its potential, work at an optimal level and make money, your time needs to be focused on development and other tasks that grow your business in a sustainable manner. Anything else and you might actually be (inadvertently) having a negative impact on your cashflow.
You’re too busy to renegotiate supplier agreements
We know that it often feels like there just aren’t enough hours in the day. You have a huge to do list that never seems to get any shorter and fewer and fewer hours to dive into it. It’s easy to overlook your supplier agreements and subscriptions are push them to the back burner but it’s possible these are actually costing you way more than is necessary.
Renegotiating with your suppliers can take time and be frustrating. But it could also see you secure a better deal, a lower price, faster delivery or better payment terms. Shopping around for a new broadband deal and a better energy company is also tedious. But it could save you hundreds of pounds – if not more. Taking time to look at all your business software subscriptions has ‘dull afternoon’ written all over it – but you might be spending thousands of pounds on systems that you’re not using, don’t need or that overlap with other tools. It’s easy to see how paying over the odds on these expenses could be draining your cash flow. The good news is that these hidden costs can be unearthed and addressed by setting aside time to dig into your current agreements.
What if it isn’t enough?
Resolving cash flow issues and putting your business back on a firmer footing can take time. If your best efforts aren’t having an impact quickly enough, we can help you surf over your short-term problems and look forward to a brighter future with a Punk business loan. Plus, we could put money in your bank in as little as five working days. Ready to chat? Drop us an email or give us a call for a speedy resolution!
