As a small business, it’s important to manage your finances carefully in order to ensure long-term success. Even if you’re not wasting money on unnecessary expenses like fancy coffee or brunch, there may be other areas where your business is losing money. At Clyr, we specialize in helping businesses identify and eliminate financial waste, so they can get a better handle on their expenses and achieve their business goals.
But what exactly is financial waste, and how can it be reduced? Financial waste is any unnecessary or unproductive expenditure that does not contribute to the growth or success of a business. This can include things like unnecessary subscriptions, outdated equipment, or inefficient processes. By identifying and eliminating financial waste, small businesses can free up resources and improve their bottom line.
So how can you reduce financial waste in your business? At Clyr, we offer a range of solutions to help small businesses identify and eliminate financial waste, including expense management software and bookkeeping consultation. By working with us, you can gain a better understanding of your business’s financial health and take control of your expenses.
Financial waste from a business perspective is any money you spend that doesn’t deliver returns. If you’re spending cash on things you don’t need, your business is wasting valuable resources that could be invested elsewhere.
In some cases, you definitely need to spend money to make money, but other times you’re just throwing money away. That’s a financial waste.
To be clear, not every dollar you spend needs to have a clear, direct ROI. Buying a prospect dinner during the closing process isn’t financial waste. A weekly office breakfast isn’t necessarily financial waste. The expense management tool that costs an arm and a leg but no one actually uses? That’s financial waste.
How does financial waste affect small businesses?
If you have more money than you know what to do with, feel free to waste all the cash you want—we won’t judge.
The reality is most businesses don’t have enough money. Small businesses in particular often struggle to keep costs under control. And according to CB Insights, running out of cash is the top reason startups fail. Don’t let that be you.
Plus, there’s an opportunity cost to financial waste. If you spent $1,000 a year on sales software you don’t use, that’s $1,000 you could have invested in training, advertising, or, you know, avocado toast.
Other impacts of financial waste include:
- Inability to scale
- Lack of funds to hire new talent
- Less able to pay off loans (so you pay more interest!)
- Limited funds to invest in community outreach
Depending on your business, wasting money could also impact your ability to get better rates from vendors, take out business lines of credit, or invest in technology to help your organization compete.
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5 ways to reduce financial waste (and grow profits)
How do you protect your business and reduce your financial waste? Start by reviewing your business accounts to see where your money is going. Then, use the tips below to find and eliminate wasted spending.
1. Stop wasting money on advertising that doesn’t deliver
There are dozens of marketing channels, hundreds of tools—and a lot of acronyms. It’s easy to get bogged down by buzzwords and marketing “experts.” Marketing can quickly turn into a money pit if you aren’t careful.
Instead of jumping to create content for the next new Insta-tok-gram platform, take it slow. If you need a website, build one using a tool like WordPress or Webflow. Choose one or two social platforms that you know your customers use.
You don’t have to waste time and money investing in every new marketing strategy. Start small, track ROI, and focus on what works.
2. Cancel that software you never use
There’s a tool for everything. Which is amazing as a small business owner. You can manage social media, track sales, generate reports, send emails, and even automatically send users resources via a chatbot.
Most of these tools offer a free or cheap version, so you try it out. But then you get busy—did you cancel that free trial or did it charge you for a full version? Run an audit of all your subscriptions and ensure you use the tools you pay for. If you do use them, check your plan. There might be a cheaper version with the features you need.
3. Reduce your fraud risks
The Association of Certified Fraud Examiners reported businesses lost $7 billion in 2018 due to fraud. As a small business, you’re unlikely to lose millions without noticing, but fraud can still impact your bottom line.
To reduce fraud risks, make sure to segregate accounting duties and run audits on a regular basis. Using spend control platforms (like ClearSpend) can also reduce expense fraud and protect you from financial waste.
4. Don’t invest in expensive office spaces unless you need them
It’s tempting to invest in those expensive desk chairs, standing desks, or that fancy coffee machine for the break room. You want your employees to be happy. And, let’s be honest, some of that stuff is just plain cool.
But in today’s digital world, most workers can do some or all of their job remotely. Invest in tools and platforms that help you collaborate remotely and save the cash to invest in growth.
If you do need office space, opt for flexible seating options, like hot seats and reservable desks, rather than giving everyone an assigned seat. This setup saves space, especially for hybrid remote companies.
5. Compare your insurance options
Business insurance is a good thing. It can protect your investments, and ensure your personal assets are covered, and sometimes it’s legally required. We’re not saying cancel your insurance!
Instead, make sure you need the insurance you have and shop around for better rates. You may be able to reduce your coverage or even combine policies and spend less for the same coverage.
How Clyr can help you reduce financial waste
Clyr is an expense management solution that reduces financial waste with powerful spending controls, and the elimination of expense reports.
Yes really. No more employee reimbursements or spreadsheets. There are no spending requirements—which isn’t true for many expense management systems today.
Even better, it takes just minutes to sign up and it’s 100% free to use.
Transactions, categories, and receipts automatically flow into the Clyr dashboard so you can monitor spending in real-time. Got questions? You can get in touch with a real live person right here at Clyr. It’s that simple.