Business owners are constantly making financial mistakes that are costing their company. This post will take a look at the top three money mistakes being made, and how you can avoid them:
They’re Too Greedy With Pricing
One of the biggest mistakes a business owner can make is to be greedy with product/service pricing. So many business owners keep overpricing their goods in the hopes of making more money. The fact is, a customer is only going to pay what they think a product/service is worth. So, if they deem your things to be too costly, they’ll go find somewhere else to spend their money. This is why the concept of a lean business is so important. With a lean business, your thoughts are incredibly customer orientated. As such, you will avoid overpricing your goods and put your products up for sale at a price that benefits the customer. By doing this, consumers are more likely to spend their money as it’s more affordable and they see better value for money in what you offer. So, stop being greedy with pricing, and think about the customer and how they can benefit rather than how you benefit.
They Pocket Their Profits
When you own a small business, it’s tempting to pocket all or as much of the profits as possible. After all, you made money, so why shouldn’t you? The problem is, pocketing all your profits doesn’t benefit your business in any way. What you should do is reinvest the profits to help your company grow. The trick is finding the best ways to invest your profits, and a good way to do this is to undergo some financial advisor training. Consider looking over some CFA level 1 study materials and training to become a Chartered Financial Advisor. This will help provide you with the knowledge to analyze your business and see the best investment opportunities out there. As a result, you can make more out of your profits and benefit your business, rather than pocket the cash and see no improvements.
They Waste Too Much
Wasting money is easily the most common mistake business owners all over the world make on a regular basis. There are so many ways a company can waste so much cash. It’s almost easier to waste money than it is to save it. Business owners waste money on plenty of things they don’t need or aren’t essential to the running of their company. A big example of this is spending money on various marketing resources that aren’t that effective. A simple marketing audit will show any business owner that lots of their budget goes down the drain. My advice is to have a full-scale business audit to find out where all of your money is going, and what the biggest sources of waste are. Then, you will learn where to spend your money and where not to spend it. Thus, waste is reduced, and money is saved.
Stop making these money mistakes if you want a healthy business that makes the most out of the money it has!