13 Ways Many Business Owners Waste Money (And What To Do Instead)

In a company’s early days, the owner and staff are usually focused on just keeping up with the work, and systems can be set up on the fly with little thought of the future. As the business continues to grow and evolve, it can be all too easy to build on existing inefficiencies or see teams retreat into silos, resulting in wasted budget dollars going to everything from overlapping software services to unused office space.

As leaders in the financial space, the members of Forbes Finance Council have plenty of experience in helping their business clients find ways to trim budgets and better allocate resources. Below, they share 13 common ways businesses waste money and offer better, more efficient ways to spend that hard-earned cash.

1. Underutilizing Purchased Software

Understanding what software your company should be using is different than actually using the software. Most businesses we talk to utilize less than 20% of what they are paying for with their accounting software. Working with a conversion specialist will allow you to modify your license to pay for what you are using or modify your workflows to include the features you should be using. – Marjorie Adams, Fourlane

2. Maintaining Extravagant Office Spaces

Recently, I have spent a good amount of time dealing with clients who spent big on unneeded, extravagant office space prior to Covid. I’ve strategized with them on how to deal with these leases when no one is in the office. Sub-leasing is one option, but that’s drying up coming into a recession. Another is cash-flow-based renegotiations with landlords, which have been successful this year. – Greg Cucino, Bridgepoint Consulting

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?

3. Overspending On Staff For Rapid Product Development

In the blockchain space, businesses tend to overspend on hiring in their early days by bringing on a large number of developers to get their products ready quickly. This often means the product lacks adequate security and is vulnerable to hacks. They also overspend on marketing before the product is ready, which brings high costs and minimal results. – Anthony Georgiades, Pastel Network

4. Not Automating Administrative Tasks

I often see business leaders still managing tedious administrative work without software or automation, which is resource- and focus-dilutive. Often, trying to do everything on your own results in lost opportunities. Putting systems in place and managing manual tasks with tech and software can help business owners save time—and money—in the long run. – David Whyte, Irwin

5. Employing Ineffective Management Staff

Many business owners waste money on managers who are abusive to the people they supervise. Losing good employees is a waste of good talent. It’s expensive to hire and train top talent who may soon leave because they find more amicable employment elsewhere. – EJ Paul, Eagle Commercial Funding Solutions, LLC

6. Trying To Manage Marketing With Insufficient Resources

Before investing time and money in marketing, business owners must first determine if they have the resources and infrastructure in place to handle all of the marketing internally. Some businesses have the manpower and resources to build an in-house marketing team, but for businesses with a smaller team, it may be suitable to invest in outside marketing solutions. – Mara Garcia, Phonexa Holdings, LLC

7. Focusing On Vanity Marketing Metrics

Marketing, while incredibly important, is littered with inefficient spending. Focus on the metrics that measure the results that are directly proven to create sales (for example, inbound leads) versus vanity metrics (such as “reach,” “likes” and “views”). If you can’t prove an action leads to a sale, there’s a large chance it’s a waste of money. – Aaron Spool, Eventus Advisory Group, LLC

8. Engaging In Digital Marketing Without Expertise

Many business owners waste money on digital marketing because they believe they can do it on their own. While it is possible, many of the elements, such as keyword research and tracking analytics, require specialized knowledge. Business owners should invest in professional services that provide experience and leverage best practices rather than attempting to do digital marketing on their own. – Angelo Ciaramello, The Funded Trader

9. Using IT Shops For Discrete Tech Troubleshooting

Many business owners waste time and money paying expensive hourly rates to local IT shops to help troubleshoot and resolve technical issues that they are currently facing. Over the long term, engaging a managed service provider to proactively monitor and maintain the IT environment will result in fewer technical problems and, ultimately, savings to the bottom line! – Sean Frank, Cloud Equity Group

10. Paying For Too Many Subscription Services

We work with thousands of businesses, and one of the main things we look at is cash flow. The major waste area we see is subscription model expenses that eat up cash flow. Often, businesses have multiple different software subscriptions with overlapping functions when they could be using one software to get the same, or better, results. Dropping those wasted expenses is one of the most important things to keep your business running lean. – Will Murphy, Everlasting Capital

11. Overspending On Discretionary, Nonessential Items

Many business owners spend too much on perks, gifts and swag. We live in a world of overconsumption, and this generation of consumers and employees is growing wary of “stuff.” Save the money and reinvest in your staff by providing them with additional help, training, education or compensation. For your customers, put that money into spending time to show them how much you appreciate them. – Jaclyn Foroughi, Brazen Impact

12. Searching For Answers Through Consulting Firms

We see larger businesses pay consulting firms or external advisors when they could instead flatten the corporate structure. Removing layers of management allows the internal team to communicate, collaborate and make decisions. Trust the internal team to find the answers. – Xan Myburgh, Backd Business Funding

13. Paying For Recruitment Services

Many business owners waste money in the way they recruit. They pay recruiters a lot when they could get the same quality of candidates by setting up an internal referral reward system. This can turbocharge growth at a fraction of the price of a recruiter while also helping to develop a strong company culture. I encourage clients to have the best retirement benefits possible to make employees stay. – Andrew Glaze, Wealth Stack