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Its common knowledge that Iowa businesses are smart with their money and implement fiscally smart practices. Kerndt Brothers would like to assist you in making these responsible choices by highlighting common money wasting practices employed by businesses, allowing you to identify and avoid them. Take a minute to read through the following list; even if you only find one point useful, it will still help your business in the long run!

Cell Phone Plans

 

Most small businesses use unlimited plans; however, almost 50% of consumers use less than 300 MP/month. By this logic, you should be cautious of buying into an unlimited phone plan. Instead, you should check your company’s cell phone plan and negotiate with your provider to get one that better matches company usage. The competitive landscape of cell phone carriers also lends itself to taking advantage of special business perks they offer. Don’t be afraid to ask for a deal on a regular basis and look around for carriers that better fit your needs.

 

Unnecessary Bank Fees

Some banks charge fees that, in large part, go unnoticed by the customers they serve. Over time these relatively small fees add up to a large sum of money that you could have saved or used. Your best weapon against this type of practice is arming yourself with information. Finding and examining the rules governing your checking and savings accounts will show you whether or not your bank can implement such practices. If your bank’s governing documents allow for these fees it’s time to investigate further by contacting them directly or take action by seeking another institution that charges lesser or no fees.

 

Annual Credit Card Fees

 

The banking industry is very competitive at this point in time, so unless you have a poor credit history, there is no reason to pay annual credit card fees. If you are being charged annual fees, you are likely wasting money. Developing a good relationship is key to receiving the best service possible from your banking institution. A good relationship can result in an extra set of eyes looking out for your financial well-being, regular promotional updates, and special consideration in future dealings.

 

Insufficient Advertising

For many entrepreneurs and small businesses advertising is considered an expense instead of an investment. This is due to a lack of understanding or a negative experience they’ve had in the past. Unfortunately, many of these entrepreneurs and businesses have written checks to advertisers and marketers without seeing any real results. Instead of continuing to perceive marketing or advertising as an expense small businesses and entrepreneurs should embrace it and follow a simple guideline, because in time it will become your greatest asset. Never sign a long-term contract! If an agency stands behind their product or service they should not make you contractually obligated to pay them on a continual basis. A good agency will allow you to fire them at any time if they are not providing the best results possible.

 

Indecision

A business staffed with good leadership is paramount to avoiding wasted funds due to indecision. Sometimes important decisions such as replacing an inefficient piece of machinery goes by the wayside, causing a ripple effect of inefficiencies. One thing you can do to avoid this is assign specific decisions to dependable employees. Your most trusted employees are likely to follow through with tasks without being prompted and actively seek beneficial business practices.

 

Travel Expenses

 

Small businesses aren’t too proud to shop around for the best airline, hotel, and car deal before they leave on any trip. An easy way to waste money is by settling for a product or service out of convenience. Expanding on this wasteful practice, some businesses allow their travelers to spend money frivolously on things like coffee, drinks, client dinners and more. Spending wisely does not make you stingy it makes you more profitable. The beauty in all of this is that travel is often times avoidable due to technology. You can easily opt out of travel by videoconferencing through services like Google Hangouts or Skype.

 

Bad Hires

Hiring the wrong employee typically costs 20% of his or her salary. This comes in the form of under producing and/or extra expenses incurred due to lack of competence. Circumvent this issue by hiring slowly and firing quickly. Don’t speed through the hiring process just because you have a seat to fill. Treat this vacancy as though you don’t have to fill it at all, eliminating the urgency that often times leads you to settle instead of choosing a candidate confidently.

 

Friends & Family Discount

Helping others is a great way to feel good about yourself; however, you’re running a business and not a charity. People outside your organization may be under the impression that you’re able to afford these giveaways but are slow to realize you are continually trying to grow your business – which makes denying these “special discounts” a very important practice.

 

Scheduling too many meetings

 

You may be surprised to know that on average 25% of the time spent in meetings is wasted. This is true of many organizations, but how do you get around it? The best way is to have an agenda for EVERY meeting. This will make meetings more fruitful by creating more efficiency, and generally shorten or even eliminate meetings.

 

Non-Measurable Marketing, Advertising & PR

Intelligent decision making is guided by ample amounts of data and information. One of the biggest mistakes a business can make is to work with an agency that does not provide quantitative data proving the service they’re providing is working for you. You are careful to evaluate other aspects of your operation, so why not demand to see how your marketing, advertising, and public relations efforts are performing? Request transparency when working with your agency by setting up weekly, biweekly, or quarterly reviews.

 

Eliminating waste is just as important to a business’ health and growth as additional revenue. Even if you follow one of these simple guidelines you’ll be strengthening your bottom line.

 

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Disclaimer

The material provided on this website is for informational use only and is not intended for financial or investment advice. Kerndt Brothers Bank and/or its partners assume no liability for any loss or damage resulting from one's reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management.