You’ve opened your business to make money not to lose them. So make sure you have tied up all the loose ends and everything is running up to speed and very smoothly. Keep an eye on the areas that might be money pits and improve, improve, improve. Here are some reasons your business is losing money and some solutions you may try to fix things:
- Inefficient Processes
Improving processes helps you shorten the order-to-cash cycle by decreasing cycle time, reducing inventory and work in progress, by increasing your production capacity and overall productivity. Usually, you achieve all the above by concentrating in you processes on what brings value to the customer and to your organization. Any methodology like lean, kaizen six sigma can be used to
- Collections related issues
a. Unbilled invoices. Don’t forget to issue the invoices, have a lean process regarding invoice issuing and don’t wait until the end of the month to send the issued invoices to your customers. Issue the invoices right away, after you completed the work or delivered the products, and send them via e-mail on the spot. They will get to the client within seconds and the payment clock can start immediately.
b. Collect your accounts receivables. Not collecting on time or at all can cause major trouble to your business. If you cannot negotiate good payment terms and on top of it the clients are paying late, after these long negotiated terms, you lose money due to the line of credit you have to use and the extra interest you have to pay in order to finance your business until your invoices are paid. You can address this issue by using a company like 24Stack that offer very efficient apps to cover every aspect of your business.
3. Employee-related issues
a. Turnover and lack of an onboarding program or an onboarding program that is not working. Make sure that you have a good recruiting and selection process that helps your company attract talented people from the labor market. Train them from the first day on the job, the sooner they will perform the more engaged they will be.
b. Disengaged employees. Disengaged employees can have a huge negative impact on your business. They are less productive and most of the time you have to pay other employees to do the job right or to cover the necessary rework. The solution here will be to measure periodically engagement, to come up with improvement plans and implement them. A fair compensation and benefits system, an excellent reward framework, lots of feedback, development and promotion opportunities as well as a participative management style will help you in this direction.
c. Poorly trained or untrained employees. Technologies, processes, management is changing. Don’t assume that people are catching things up from thin air. They need high-quality training and development both on the job or using another training venue such as e-learning, blended learning or classroom training.
- Marketing Related issues
a. Measure the results (ROI) you get from your marketing activities, regardless of their type: publicity, promotions, sampling campaigns, advertising, or social media. For social media campaigns, you can use programs like Google Analytics to measure the effectiveness of your efforts.
b. Outdated Marketing Campaigns can also be a money pitfall. Don’t think that you can use the same type of campaign like in the ‘90s. You need something that will appeal to the modern and sophisticated customers of today, the ones you want in your portfolio.
5. Customer related issues
a. Follow up with the customers’ inquiries as soon as possible and you might gain a new sale. If you answer via e-mail make the response personal. Of course, the message should be free of grammar and spelling mistakes. We are talking about the respect you owe to your clients and about the quality you deliver for them.
b. Don’t forget that customers are people. Little things can change the relationship you have with your customer and your business will stand out in a good way.