You’ve read hundreds of articles about how to make money from your start-up business. So, what about how to lose money?
As you’d expect, it’s much easier to lose money in business than it is to make it. Nearly every step you take on your journey to being a successful CEO is filled with potholes, all looking to trip you up and cost you money.
It’ll come from places you might expect, such as making the wrong investments. However, you’ll also lose money in the places you think are safe – in the investments that you think are valuable.
One obvious way to stay on top of cashflow is running a tight budget – but these three areas will also help you out.
Forget about your business’s most important asset
For the vast majority of businesses, your data is your most valuable asset. Without it, you have nothing: no customer information; no product or service information; no research.
So, it’s strange that so many people forget to protect it. If you get hacked or your hard drives corrupt, you’ll spend large amounts of money trying to get it back and repairing the damage.
Even getting the data back can cost huge amounts, if you haven’t backed it up. So, you need to ensure that you have good data protection, you back up regularly, and you know a company that deals in professional data retrieval.
Hire the wrong people
It’s easy to hire the wrong people. You might get lured in by an interviewee’s lies or exaggerated stories. You might be desperate to fill a role and move too fast.
You might not ask the right questions, or delve in deep enough into someone’s experience. The results of hiring can be devastating for a small business.
If they aren’t a nice person, they’ll upset your other employees and even yourself. Then, you might have people handing their resignation in. If they aren’t good enough or you lied about their experience, they’ll be costing you money instead of making it.
So, have a thorough recruitment process in place, with notes in the contract about how much notice is needed. If you have a short notice period for the first month, it gives you time to get to know them (and fire them if necessary), without having to waste more money on their salary.
Get your priorities wrong
Having a bright, light, airy office is the dream. However, it’s not one you should be concentrating on right now. If you don’t have many – or any – employees, you don’t need a gorgeous office space situated right in the city center.
If you do choose to spend all your incomings on rental fees, your overheads will soar, and you’ll end up seeing your business bank account empty faster than you can fill it up.
It’s important to get your priorities right straight away: you want to make investments and spend money on the things that will help your business succeed. If an investment isn’t going to earn back its value (and more), then forget about it.
Everything needs to deliver ROI now – and you need to be strict in adhering to this.
So what have you done that has cost your business big money? I would love to hear your thoughts on this in the comments below.