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Three Profit Leaks Your Business Should Plug ASAP

Kevin Gardner
It is important to understand the finances of your business and then it is equally important to know how to continuously improve and work to make your business finances better.
As a business owner, one of your main objectives should be to plug any financial leaks within your business. It's tempting to ignore such leaks when your business is profiting. Why bother fixing what's functioning right?
Losing money through leaks minimizes the profit you could be making today. It also doesn't improve on its own; instead, it worsens left unattended and continually drains profits. From keeping the doors open to growth potential, such leaks will eventually impact every facet of your business.
Let's explore three common leaks causing your business to lose money and what you can do about them.

1. Outdated And Poorly Designed Timekeeping Processes

Time management is  crucial for positive resource allocation, invoicing those resources, and tracking time workers spend on specific tasks. Late, inaccurate, missing timesheet management data due to manual entry and calculation can hinder your cash flow. Automating can help.
Time tracking software offers businesses a cost-effective and automated timekeeping method to simplify, reduce errors, and add functionality to the process.
Project managers, for example, gain comprehensive oversight as to how time is being spent and areas to better allocate resources. To keep billing accurate, this software offers a centralized tool that can be connected to shift schedulers and accounting software to track time associated with each invoice, contract, and project.
PCMag points out that some of these software applications can even record screen and keystrokes.

2. Employee Turnover

Many small businesses undervalue the need to have a solid employee retention strategy. While employee turnover is an unavoidable small drip for any business, efforts should be taken to keep it from becoming a gushing leak. Why?
Staffing inconsistencies have an indirect cost that often influences how customers feel about your brand and customer satisfaction. The direct cost employee turnover creates includes retraining, recruitment, separation, productivity losses in the separation gap, etc.
The exact direct cost varies based on industry, skill set, job title, but you can use the position's salary to estimate what you'll spend to fill it. According to Chron, you can roughly calculate the cost to replace any given employee as 38 percent of worker's salary.

What Can You Do?

Thoroughly assess employment retention strategy each year to keep it up to par. It should focus on areas that are priorities to employees. Address competitive pay and benefits, appreciation programs, on-boarding and training, development opportunities, safety measures, work tasks, policies for work-life balance.

3. Neglecting Customer Retention

A single sale is great, but a retained customer is more than just a point of multiple sales. They become your brand ambassadors, advocates, sales multipliers, and a crutch whenever your market slows. So, how to retain customers?
Efficiency with a standardized business process to route data along a specific path is a key factor in customer retention, and workflow applications are an integral part of achieving that standardized process. This is particularly true if you have a mobile workforce.
These applications offer more control and accuracy across marketing to customer service, and remove the potential for manual neglect and mistakes. Kissflow breaks down how workflow software is used to eliminate bottlenecks and confusion in processes like purchase orders that influence customer satisfaction.
These are serious potential leaks in your business's financial plumbing, and putting a bucket under such leaks is never a solution. Eventually, that slow drip will worsen, and you may find your profit tank completely empty if you don't act to address and repair your profit leaks sooner.