5 causes of financial loss in a business
Know about the main causes of financial loss in business and make sure that you do not let them intrude. Flaws are fine but they should not exist if they can cost the well-being of growth and even the existence of your business.
Wednesday July 17, 2019,
4 min Read
Running a business is not a child’s play, countless responsibilities give you challenge of prioritization. What needs to do first, what can wait for a while, is always a struggle that keeps going on in your conscious as well as sub conscious mind. No emotions, no fears, every situation just needs a practical solution. If you have that, it is fine, if not then be ready to face the consequences that are always expected to act aggressive. If any of the situations take a monstrous turn and cause big, bigger, in fact huge financial loss to you business then only God can help.
Well, talking about God is good but the reality is that you are the only person to find the practical solution as the almighty too helps those who help themselves.
If you are going through a financial chaos in your business that looks impossible then it is necessary to act as soon as possible. Most important thing to do on this aspect is to know the actual causes that worked behind the turmoil. Generally, below situations are the culprit.
1. More than required office space
As the saying denotes – excess of everything is bad, your office space should be according to the need. Every inch of it has a price and if you are paying for it without using it completely, then you are not acting wise. The number of employees, equipment (if any), furniture, space for clients, kitchen/lunch room etc. are some of the basic requirements. Using the space, more than this is sure to show its effect on monthly expenses. Forget not, you are doing business and even the time has its price then how can you miss to correctly calculate the cost of office space?
2. Shared bank accounts
Oh! Many businesspersons do this biggest and most common mistake. Oops! do you also do the same? It is time to change the practice then? Never ever mix the personal and business accounts. Due to this, you miss to understand clearly, what part of that money is for personal use and you may start spending business funds. Certainly, this is the point from where the mess of money starts. In fact, it can have a bad impact on your business as well as personal life. To compensate any risk in the business, you may take out money that was for some personal use. Stop doing it now; this is how you run a business. Organised approach and categorization are the two important tools to keep the commercial growth assured. If it is too late in your case then gather some hope from ‘better late than never’ saying.
3. Loss of merchandise
It is a big loss if you deal in physical products. Whatever was the reason, natural calamity, fire, damage etc. loss of merchandise is like unbearable pain. To avoid such things you need to work on precaution plans. Just like many other companies, you need to invest more on security of your products and stock management. Precaution is always better than cure and this is what you need to do. Staying careless on this aspect, attracts only destructive incidents. You invest money, material, human power, time, energy, efforts and what not on products. Why to waste all these, work smart on the safety of the stock.
4. Not paying heed to pending obligations
Missed repayments initially act annoying but later become aggressive and cause big loss. Rise of obligations and not paying them on time can write the destruction destiny of your business. First of all, pay all the loan instalments on time. In business, the obligations are usually big and multiple and they all support you in your tough times. You cannot just take them as lightly as the fast loans for unemployed, which can be paid off easily once you get the next job. This is serious business and you need be very sincere. In Ireland, many businesses face difficulty to priorities their pending obligations and fail to pay them on time. One more thing, try to not to take new loans until you pay off the previous debts.
5. Time waste is a bad habit do not let it become your practice
In business, time is money, which means money is time. It is important that you spend the working hours in giving 100% productivity. No one can save your time if you want to waste it. If there are employees in the company, make sure they work sufficiently to justify their salaries. Task to every person should be assigned and defined and the performance should be checked through decided parameters. Set goals for yourself too, make a routine and follow it.