If you’re like most business owners, you’re probably used to the occasional money leak. Maybe a client doesn’t pay their invoice on time, or a vendor charges you more than they should have.

But what if I told you that your business is probably leaking money in more ways than you realize? In fact, it’s quite possible that your business is losing money every single day in small ways that add up to a big problem.

The good news is that there are ways to plug those leaks. But first, let’s take a look at some of the most common ways businesses leak money…

1. Wasted advertising spend

Advertising is one of the most common ways businesses leak money. And it’s not hard to see why.

There are so many different advertising platforms and options out there, that it can be tough to know where to spend your money for the best return on investment.

What’s more, even if you do find a good advertising platform, there’s no guarantee that your ads will actually be seen by potential customers. In fact, research shows that the average person is only exposed to about 1% of the online ads that are out there.

The bottom line is that if you’re not careful, you can easily waste a lot of money on advertising that doesn’t generate results.

2. Out-of-date inventory

Another common way businesses leak money is by holding onto inventory that’s out-of-date or no longer relevant.

Maybe you have a product that’s been sitting on your shelves for months (or even years) that you’re struggling to sell. Or maybe you have a service that’s no longer in demand.

Either way, holding onto inventory that you can’t sell is a surefire way to lose money. Not only are you losing out on the opportunity to sell that product or service, but you’re also incurring storage costs that eat into your profits.

3. Late payments

Late payments are another common way businesses leak money.

Whether it’s customers who are slow to pay their invoices or vendors who are late to send you a bill, late payments can put a real strain on your cash flow. And if you’re not careful, they can even lead to financial ruin.

4. Employee turnover

Employee turnover is yet another way businesses leak money.

Every time an employee leaves your company, it costs you money. Not only do you have to spend money on recruiting and training a replacement, but you also lose out on the productivity of that employee while they’re gone.

What’s more, employee turnover can be contagious. If one person leaves, it can make other employees question their own job satisfaction and whether they should stay with the company.

The bottom line is that employee turnover is a major money leak for businesses of all sizes.

5. Poor customer service

Finally, poor customer service is a common way businesses leak money.

If your customers are unhappy with your product or service, they will not likely stick around for long. And every time you lose a customer, you also lose the revenue that they would have generated.

Moreover, unhappy customers are also much more likely to tell others about their bad experiences. And that negative word-of-mouth can cost you even more business in the long run.

So, those are some of the most common ways businesses leak money. As you can see, there are a lot of potential problem areas. But the good news is that there are also a lot of potential solutions.

Here are a few ways to plug the leaks in your business and start saving money:

1. Review your advertising spend

If you’re concerned about wasting money on advertising, take a close look at your ad spend.

Start by evaluating which platforms and channels generate the most leads and sales. Then, focus your advertising budget on those platforms and reduce or eliminate your spending on everything else.

2. Get rid of out-of-date inventory

If you have inventory that’s out-of-date or no longer relevant, get rid of it.

Don’t try to sell it at a discount. Just get rid of it and free up some cash flow.

3. Get paid faster

Late payments are a major money leak for businesses. So, if you want to plug that leak, you need to get paid faster.

There are a few ways to do this. First, you can offer discounts for early payment. Second, you can use invoicing software that makes it easy for customers to pay online. And third, you can hire your Chartered Accountants to help you track down late payments and get the money you’re owed.

4. Reduce employee turnover

If you want to reduce employee turnover, there are a few things you can do.

First, make sure you’re paying your employees a competitive salary. Second, offer benefits and perks that will keep them happy and engaged. And third, create a positive work environment where employees feel valued and appreciated.

5. Improve your customer service

Finally, if you want to stop leaking money due to poor customer service, you must make some changes.

Start by identifying the biggest pain points in your customer’s journey. Then, work on addressing those pain points and making the experience better.

You can also use customer feedback to improve your customer service. Ask your customers for their honest opinion and then use that feedback to make changes that will improve the experience.

By plugging the money leaks in your business, you can free up cash flow and start saving money. So, don’t wait any longer. Start taking action today.

Being able to identify these types of ‘risks’ in your business will help you prepare your business better for any possible scenario and lock in your path to success. You can find out more ways your business could be at risk through this free risk assessment survey.

If you’re looking for other great tips to help you secure your cash flow, we recommend reading this article next!

Want to skip ahead and get tailored advise specifically for your business? Let’s have a quick chat and don’t worry, it’s on us – it’s a free discovery call. You can book a date and time that works for you here. 

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