Much of the information available to help businesses is focused on what they need to do to make money. But knowing what actions could cause your business to lose money is also important. After all, in the same way that you should know what direction to go in for success, you also need to know what direction to avoid in order to avoid losing profits.
Check out the four surprising ways that businesses end up losing money below to learn from the mistakes of others.
1. Not Having the Right Insurance Coverage
Businesses need insurance coverage just like individuals do, but some business owners may decide to skimp on the coverage they really need because they want to save some cash. The truth, though, is that if you don’t have the right level of insurance coverage, it could cost you more in the event of a disaster, accident, or lawsuit.
If you have a company car, for example, you must get auto insurance coverage for it. If you have employees, you must get worker’s compensation insurance. And you should definitely have general liability insurance to protect you as well. Plus, with online insurance available, there’s no excuse for not finding and buying the right policies.
2. Being Too Disorganized
Believe it or not, being too disorganized in your workplace could actually lead to a loss of profits. And being organized goes beyond simply keeping a tidy desk or a clean workplace. You need to have organized systems in place that your entire staff can follow so they can become more effective and efficient at whatever they do.
For example, if you hire a salesperson who doesn’t have an organized system for tracking leads and going after them, you could miss out on a lot of lucrative opportunities. The simple solution would be to set up a system that provides quality and consistency.
3. Waiting Too Long to Follow Up
If a customer emails or calls you to ask about your services or products, you should respond as quickly as possible. Waiting too long will result in them going elsewhere and you losing money.
Unfortunately, a lot of business owners think that it’s fine to reply to an inquiry within about three days, but you and your staff should instead make it a point to get back to inquiries within 24 hours for the best results. This will ensure that the customer hears from you before your competitors.
4. Sticking with the Same Vendors for Too Long
Sure, it’s a great idea to find valuable vendors and show your loyalty to them, but what if they’re increasing their costs and not helping you stick to your budget?
You could be losing money and reducing your profit margins if you don’t regularly make it a point to research other vendors to get more competitive pricing on the products or services you need to keep your business running. And if you contact other vendors and get a better price, you might even be able to negotiate a better rate with your existing vendors.
These are just four of the many ways that businesses could lose money every day, so avoid these mistakes and do business wisely for better results.