Business, by its nature, means you must take on certain risks. However, smart business people know that risk management can reduce their exposure and can help ensure a steady profit over time. If you plan carefully for the normal occasions of risk exposure, you will be able to minimize problems that cost your company money. Here are 5 areas that can often make a big dent in company finances.
Skyrocketing Payroll Expenses
One of the most common problems that can become a significant expense for businesses is sudden increases in payroll expenses. When big orders arrive, the first response may be to put on more overtime, but this can quickly become a drain on profit margins. Managing payroll costs should always be a factor in your business planning. When unexpected growth arrives, be ready to add on more part-time or temporary workers, before automatically adding the double-whammy of overtime costs.
Today’s businesses rely heavily on electronic records. When a loss of data occurs, whether by hacking or by technical issues, you can lose significant amounts of important data that can negatively affect your ability to serve your customers. Savvy business owners make careful IT investments that will help them to store records safely online, prevent malware and viruses and otherwise protect their data.
Product Liability Problems
Many product liability problems involving large corporations have been in the news recently. But similar problems can also affect small businesses and can be the source of significant legal expense. Quality control should always be a paramount concern for your business. In addition, you can protect your company by ensuring you have the right insurance coverage from a company like Zuma Insurance. For example, floor covering contractors insurance coverage could help a business cover legal costs and settlements, if they are involved in a lawsuit that involves a product problem or injury liability.
Workers Compensation Claims
Worker injuries can also be the cause of increased costs for workers compensation insurance. Safety should be a primary concern at all levels of your business. Smart business owners institute safety training for all employees and ensure that safe practices are encouraged on a daily basis. This effort can result in fewer worker injuries and lower workers compensation costs.
Runaway Advertising Expenses
Advertising is a necessary expense that can be very pricey, and many businesses soon find their costs for attracting customers soon outpace the new business. You should do a careful analysis of the type of customers who will use your product or service. “Targeted” marketing allows you to focus your costs on these groups of people, so you can make the most of your advertising dollar.
Managing expenses is a critical part of every business owner’s daily tasks. Careful attention to those issues that can make significant dent in your budget will help you to ensure healthy profits margins as your business grows. These 5 business expenses can come up unexpectedly and can be of particular concern. Keep a close eye on these areas, and you will be able to stay profitable over the long term.