As a small business owner, you know that being successful is all about cutting costs and reducing overhead wherever possible. But sometimes business owners find themselves scratching their heads, trying to figure out where the money is going and why it seems to keep mysteriously slipping away. It’s not a mystery – in fact, there are several common ways that a business may be losing money without even realizing it. Here are 4 such ways, and how you can correct it if you’re one of the victims.

Office Rental and Equipment – If you currently rent office space, it may be time to take a step back and examine a couple of things. First, do you really need that space, is its size appropriate, or could you downsize, and would something like sharing an office with another business be a more affordable option for you? In terms of equipment, you should also be sure that what you have is only what you need, otherwise you are probably wasting money. Consider such cost-effective alternatives such as cloud computing and virtual phone systems (we happen to know someone who can help you with this one!). 

Insurance – Ever heard of the term “insurance poor”? It basically means that you’re spending way too much on a “what if”. Of course insurance is important, especially for a business, but it’s also important to conduct an audit from time to time to make sure you’ve got the right amount and type of coverage, and whether there’s a chance you could be saving money, either by combining multiple policies or switching providers. Just be sure to check any potential new insurance companies out to make sure they are financially sound before switching.

Marketing Activities – You need to market your business, but are you really sure the money you’re spending is getting the type of return it should? Marketing is a funny thing – what works for one business may be a disappointing failure for another, and there are so many different methods and techniques. That’s why it’s so important to consistently measure and analyze your results. This will help you to quickly learn what’s working and what isn’t so you can stay on top of your marketing spend.

Networking or Trade Events – It may seem like a great idea to attend these types of things to learn about your industry, how to become more successful and to network with other influential people. Before you do, however, make sure the costs associated make the outcome worthwhile. Often when you add up expenses such as registration fees, airfare, hotel stays and food, what you end up getting out of these events isn’t worth what you spent to attend them. 

If you’re going to make it in business, especially given today’s economy, you have to find ways to cut costs. More importantly, you have to make sure that the activities and investments you’re currently involved in are not costing you more money than they’re worth. These are just four such things to watch for. As long as you are diligent and ever-aware, you’ll be able to stay on top of your expenditure and manage it in a way that is always profitable.