If you’re not reviewing expenses monthly (and preparing a comprehensive financial statement), you are very likely letting money leak out of your business. Here are a few examples of where businesses often overspend:
Did you review your policy renewal data for accuracy? When changes have been made in your business (e.g., employee count, number of locations, property requiring coverage, policy limit adjustments, types of coverage, it’s vital your insurance agent be made aware. It’s easy to set coverage to autopilot and end up overpaying. Also, you’ll want to make sure you get a few competing quotes during each renewal period to ensure you’re getting the best rates.
Action:Request a copy of your policies and review them against your current business needs. If anything has changed, request an adjustment. These can be made mid-policy year. As renewal nears, reach out to additional brokers to request competing quotes.
Paying for subscription-based software, streaming music, Group X programming, or marketing plans that you’re no longer using or not giving you substantial return?
Action:Review your current subscriptions. Are you using them? Are you still under an obligation to pay? If you’re under contract, make a concerted effort to relaunch the initiative or service, so you’re getting some ROI or request the fees for early termination. Sometimes it’s better financially to pay for an early cancellation if you’re getting nothing from the subscription.
Is that commission structure you put in place yielding the sales you need? Is your monthly bonus in line with how much you should be averaging for new member spend? Are your training packages priced appropriately to account for the session rates you’re paying trainers? What about your salaries? Are you top-heavy? Payroll is by far the most common area for overspending, and it can cripple a business.
Action:Review all pay plans currently in place for your business. Compare the spends in each category (sales, PT, management) to industry standards. Analysis should be done as a percentage of revenue and in the area of sales, the cost of acquisition per new member and reviewed monthly. Carefully think through any adjustments. You don’t want to roll out new structures frequently as this creates employee confusion and dissonance.
The main takeaway here is to keep your eye on the ball, your monthly financials. If you don’t have a clean set of books or a clear process for review, it’s likely you’re wasting money. Take the extra time to ensure the money you work so hard to bring in the front door isn’t sneaking out the back.