It’s not uncommon to have a thriving business with loads of customers and a great product and still not make any money. Often, it’s not because there’s anything wrong with the strategy or the marketing, but because the business hasn’t learned how to control costs. Costs, left unchecked, can eat into profitability, and in the worst cases, force a company into bankruptcy.
In this article, we’re going to take a look at some of those niggling costs and suggest ways to get rid of them.
Customers love to use their credit and debit cards. But unfortunately, processing those payments isn’t free. Companies like Visa and MasterCard – the firms that run the payment systems – charge merchants (that’s you) a percentage fee each time they perform a transaction on your behalf. Your business needs to be able to offer a variety of payment methods, but transaction fees can cut into your margins substantially, leaving you out of pocket.
So what should you do? The best strategy is to pick a payment provider with upfront fees that aren’t too complicated to understand.
Printer costs are out of control. While the price of printer units themselves often seem reasonable, the long-term cost of refilling them can be extraordinary. The good news, however, is that sites like 123Inkjets.com.au offer cut-price replacements, bringing costs down. These days, there’s no need to pay more than you need to.
While bank accounts for private citizens are often free or low-cost, the same is not true of business bank accounts. If you run a business, the cost of a bank account scales with your usage: the more banking services you use, the higher the fee. The model works great for banks, but it can shave off a few percentage points here and there, making it hard to turn a profit, especially in low-margin lines of work.
Banks also like to offer business customers overdraft facilities according to https://gocardless.com/guides. These facilities are convenient when you need a little extra money to see you through a cash flow pinch, but the decision to use an overdraft can come back to bite you in fees. Most banks charge both a standard overdraft fee plus any interest on the money that you borrow.
Employee turnover – or losing employees and having to replace them – is a notoriously expensive process. Not only do you have to deal with the loss of a skilled person who knows your business, but you also have to go to recruitment agencies and websites to find you a replacement. Unfortunately, recruiters don’t do what they do out of the kindness of their hearts: they can charge a hefty fee for each person they place in your firm.
The cost of finding a new person can be high and scale with the level of skill. Low-skilled workers can cost up to three months wages, while to find a high-skilled person, you might pay up to a year’s salary in recruitment costs.
Are you letting niggling business costs eat into your profits?