August 21, 2015
Small Business Owners’ Spending Discussion
By Maureen McCabe
When you are running a small business, it can be tricky to manage your budget. While the thought of running your own business can be exciting, without careful attention to detail and thorough planning, you may find your new business venture quickly becoming a huge risk. Here are four of the most common small business owner spending mistakes you’ll want to avoid.
1. No Business Plan
Effective business plans contain vital elements of the business idea and present financial information relevant to making money from the venture. The business plan can be used as a blueprint to entice investors, or if you’re not looking for outside money, can be used to detail a business’s financial projections.
Good business plans make calculations of profit expectancies using educated estimates of how much money will be earned, and how much will be spent. Financial projections can include the following:
- Break-even assessment to determine if business scheme will make enough money to cover costs
- Profit/Loss calculation which includes formal, monthly sales, expense, and profits for the first year
- Cash flow estimate to ascertain the amount of operating cash necessary every month
- Start-Up projection to tally expenses that will be acquired before the business opens
2. No Marketing Strategy or Marketing Plan
A marketing strategy and plan are necessary to attract customers. A significant spending mistake that small business owners make is not budgeting for marketing expenses that make your business more profitable. Small business owners need comprehensive knowledge of who their customers are, who their competitors are, and which types of marketing strategies will reach and attract new customers.
The goal of a marketing plan is to employ specific procedures that will raise sales and profitability. Your marketing plan should include the following:
- Target Market
- Product Features and Distinctions
- Promotion Strategies
- Position in Market and Branding
- Plan to Monitor Results
3. No Website or Non-responsive Website
A major spending mistake made by small businesses is not taking advantage of current technology and marketing advancements. More and more, people are searching for your business information online prior to calling you or visiting your place of business. Today, all websites need to be mobile-optimized, which means they translate easily to other viewing devices such as smartphones and tablets.
Why is it so important to have a site that functions well on mobile? Google’s Mobile Path to Purchase 2013 study found that…
- Consumers spend more than 15 hours per week researching on their smartphones
- 74% used a search engine on mobile to begin their research
- 55% of mobile consumers want to purchase a product or service within an hour
- 93% of people who used mobile to research a business go on to make a purchase
Additionally, most visitors leave a website in less than ten seconds. Below are some common web design oversights made by new businesses:
- Poor navigation structure
- Ineffective Calls to Action, CTA
- Limited color and contrast
- Uninformative and irrelevant content
- Website page load speed
4. Unnecessary Expenses
Many business owners take on unnecessary financial obligations that devastate their bottom line. Here are some unnecessary expenses that can often be avoided:
Hiring Nonessential Personnel
Nonessential personnel are expensive and negatively impact any business profit. Small businesses can save a great deal of money by outsourcing or hiring an independent contractor rather than choosing to increase their head count.
Merchant Account Fees
In general, a massive percentage of business sales are paid for by credit card, and card processing fees are an unavoidable business cost. Processing fees vary, and choosing the incorrect merchant service provider could cost you thousands of dollars extra in processing fees.
According to Industry Canada only 51% of small businesses survive beyond the first five years. Make yours one of them by avoiding the four major spending mistakes and starting with a profit-boosting Marketing Check-up from McCabe Marketing!
Check out these posts:
Eight Tips to Avoid Money Burning Marketing Mistakes that Reduce Profits.
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Eight Tips on How Blogging Increases Your Website Ranking and Helps You Reach Page 1 on Google.
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